* Czechs surprise with Swiss franc bond
* Swiss institutional investors, asset managers buyers -lead
* Dealers see little local market impact
(Adds lead manager, dealers, market reaction)
PRAGUE, Oct 21 (Reuters) - The Czech Republic priced a
surprise 500 million Swiss franc ($494.6 million) bond on
Wednesday, widening its funding base to include Swiss
institutional investors.
The 2.875 percent coupon bond due in 2016 was issued with a
price of 100.587 []. Settlement will take place on
Nov. 23, the lead manager said.
The ministry had announced no plans to tap the Swiss franc
market, nor to issue any other paper than domestic and
euro-denominated bonds.
The buyers were "a broad range of Swiss institutional and
asset managers," said Martin Meili, Swiss franc head of
syndicate at Royal Bank of Scotland in Zurich.
He said no other issues were planned with the Czech ministry
for the time being.
No other details were available.
A Czech finance ministry spokesman declined to comment and
said a press release would be released on Thursday.
The Czech Republic, with A1 rating from Moody's, has been
able to finance its rising deficits throughout the economic
crisis, unlike some countries in the region that were forced to
take loans from the International Monetary Fund.
Dealers said the pricing of the Swiss franc bond was similar
to crown-denominated bonds, and should not impact secondary
market prices, which have strengthened in the past months on
lower supply.
The Czech finance ministry has lightened bond issuance in
local currency in the final months of the year after heavy
issuance in the first half.
"This means even lower issuance for December, if there will
be anything left at all," said Frantisek Kanka, a dealer at
Komercni Banka.
Dealers expect some weakening of bonds when heavy issuance
starts again in the new year to help finance a widening budget
deficit, which is seen above 5 percent of gross domestic product
next year.
The Czechs planned gross issuance of about 280 billion
crowns ($16.18 billion) this year. They met a portion of that
with the sale of 1.5 billion euros worth of 5-1/2 year bonds on
international markets at the end of April.
They have also started issuing euro-denominated bonds on
local markets.
In 2006, the ministry issued a 30-year, 30 billion yen bond
in a private placement.
(Reporting by Jason Hovet, Michael Winfrey and Jan Lopatka)
