Slovaks reopen bond with largest sale since euro

                                
 BRATISLAVA, Aug 24 (Reuters) - Slovakia placed 461 million
euro in four-year bonds in an auction on Monday that surprised
the market with strong demand and was the largest sale of state
debt since the country entered the euro zone in January.
                                
 The finance ministry's Debt and Liquidity Management Agency
said total demand was 793.5 million euros in the fourth tranche
of the 3.5 percent, March 2013 state bond, up from only 174.0
million in the previous sale in June.
                                
 The bid/cover ratio was 1.72 on Monday, compared with June's
1.55.
 "This size came as a bit of a surprise as the market was
looking for around 150 million euros to be sold today," said
David Schnautz, bond analyst at Commerzbank in Frankfurt.
                                
 "It is not only the biggest sale since the 2 billion euros
syndicated 4.375 percent Jan 2015 bond on May 25, it is also the
biggest reopening issue for Slovakia since their admission to
the euro zone."
                                
 Slovakia, which adopted the euro in January, has sold 2.859
billion euros in treasury bonds so far this year, including
Monday's auction.
                                
 The country also tapped financial markets with an
international bond worth 2 billion euros in May, priced at 170
basis points over mid-swaps.
                                
 Martin Koska, an ING Bank dealer in Bratislava, said he was
also surprised by strong demand in Monday's auction, saying the
market had expected around half of that volume.
                                
 "Regarding the yield, the state appeared to have got a fair
deal. The secondary market was bit lower, but the (yield) spread
is roughly in line with the previous auction, or around 150
basis points over mid-swaps," Koska said.
                                
 The debt agency said in July it could place domestic bonds
worth 1 billion euros by the end of 2009, though added the
actual issuance would depend on market conditions. It also
planned to sell some 1.5 billion euros in treasury bills.
                                
 Slovakia needs to increase its borrowing this year because
the economic recession cuts budget revenues and the state sticks
to the original budget spending plan.
                                
 The Finance Ministry expects tax revenue for the 2009 budget
to fall by 16 percent versus the original plan, and forecasts
the economy will contract by a real 6.2 percent this year.
 (Reporting by Peter Laca and George Matlock; editing by Chris
Pizzey)