* Poland sells $2.37 bln of 2-yr bonds amid high demand
* Czechs fail to sell whole offer of 5 pct 2019 bond
* Market expects zloty to appreciate, economist says
By Dagmara Leszkowicz and Marcin Goettig
WARSAW, Jan 13 (Reuters) - Poland and the Czech Republic,
both facing record borrowing needs, enjoyed varying fortunes
that reflected expectations for their respective currencies when
they tapped the market for fresh funds on Wednesday.
Poland sold a total of 6.6 billion zlotys ($2.37 billion) in
2-year bonds due 2012, attracting record high demand that calmed
concerns over Warsaw's ability to sell its debt after a spike in
borrowing requirements.
In the neighbouring Czech Republic, however, demand for
longer-dated papers was thin and the finance ministry failed to
sell the whole offer at its first tender of 2010.
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"Poland had a successful tender of eurobonds recently which
has already lowered borrowing needs by 10 billion zlotys," said
Piotr Kalisz, chief economist at Citibank Handlowy.
"Additionally, the market widely expects the zloty to
appreciate, whereas the Czech crown is expected to depreciate
further or at least to weaken against the zloty."
In Wednesday's primary tender, Poland sold 5.5 billion
zlotys of OK0712 bonds, with demand reaching 16.2 billion.
The minimum price was at 882.60 zlotys, with the average
yield at 5.052 percent, below the 5.090 percent recorded at the
last two-year bond tender in December.
Yields of Poland's 2-year benchmark bonds fell by some 5
basis points from the level before the tender to 5.02 percent.
Yields have now fallen a total of 10 basis points this week.
At the top-up, Poland sold a further 1.1 billion zlotys
worth of paper on offer. Demand reached 4.2 billion zlotys.
"A couple of recommendations have been published recently
saying interest rates in Poland will not rise very quickly,
which prompts investors to buy 2-year bonds as they are seen as
a safe investment," said Ernest Pytlarczyk, chief analyst at BRE
bank in Warsaw.
EXTERNAL DEBT
The Czech Finance Ministry sold 5.347 billion crowns ($298
million) worth of the 5.00 percent 2019 bond <CZ1002471=> out of
5.95 billion on offer in the first, competitive auction round.
Investors bid just 1.21 times the amount sold. The average
yield was 4.303 percent, in line with the market and up from
4.18 percent in a November auction following a steep yield rise
at the beginning of this year.
On Monday, Poland successfully placed a 15-year Eurobond
issue worth 3 billion euros, lifting local bond prices. The
order book reached 7.5 billion euros.
The head of the finance ministry's debt department, Piotr
Marczak, told Reuters in an interview on Wednesday that after
that placement Poland had now exceeded its 2010 external
financing plan but said it was considering further foreign debt
issues to help relieve pressure on the domestic market.
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"We want to have the ability to move financing flexibly from
the domestic market to the foreign one," Marczak said.
"This means the possibility of increasing foreign financing
if need be."
Poland's external debt currently accounts for about 27
percent of its total debt. The country's total borrowing needs
are seen at 196.8 billion zlotys in 2010.
In the Czech Republic the government is planning to sell up
to 292 billion crowns in domestic bonds this year. The figure
will be lower if the government taps the eurobond market, which
it has said it may do if market conditions are favourable.
For details of Poland's primary 2-year bonds tender, please
click on []
(Additional reporting by Pawel Sobczak; editing by John
Stonestreet)
