* 15-yr auction demand strong, yields move further up
* Plan three bond auctions in May, adds April sale
* Markets brace for new supply
(Releads with auction)
By Jason Hovet
PRAGUE, April 1 (Reuters) - The Czech Republic sold more
than offered in an auction of its 4.70 percent coupon, 15-year
bond on Wednesday and accelerated its borrowing plans, scooping
up funds despite higher yields.
The Czech Finance Ministry sold 11.81 billion crowns'
($572.2 million) worth of the bonds due 2022 <CZ1001945=>
<CZ15YT=RR> in the first, competitive round of bidding.
The average yield rose to 6.13 percent from 5.329 percent at
a June 2008 auction, while demand for the issue totalled 13.59
billion crowns compared with 6.8 billion offered in the first
round.
Earlier in the day, the Finance Ministry said it would offer
21 billion crowns' ($1.02 billion) worth of state bonds in May
auctions. It will also offer an additional 7 billion worth of
bonds in April, on top of 15 billion crowns already planned,
through an auction of its 10-year bond due 2019.
"The demand is more than I would expect," said Komercni
Banka dealer Dalimil Vyskovsky. "But you still see rising
yields, so I'm not sure we can call it a positive. And when you
see the supply for the next two months, that plays into asset
swaps widening."
The Czech Republic has picked up the pace of borrowing in
the past month after a cautious approach since last autumn, when
central Europe's markets fell victim to the widening financial
crisis.
The ministry put on hold a planned eurobond issue in
February because widening credit default swap prices in the
region had forced debt spreads wider.
But last month it sold 35.4 billion crowns of bonds in March
at three domestic auctions, almost a third more than planned.
Finance Minister Miroslav Kalousek said political turmoil
might also pose risks to the Czech Republic's financing costs
after an opposition-led no-confidence vote toppled Prime
Minister Mirek Topolanek's government last week.
"When an economic crisis is compounded by the opposition to
include a political crisis, the opposition must realise that
that it complicates problems with financing debt, as well as
maintenance costs," he told Reuters.
Czech yields had already been steadily rising, and dealers
said the new issuance plans could push them even higher.
"I'm afraid on the long-end there will not be such demand,"
said a local fund manager. "The new calendar (includes) quite a
lot, so I would expect spreads to widen."
The 15-year bond <CZ15YT=RR> was quoted 87.50/89.00,
yielding 6.085/5.905 percent, by 1125 GMT. It traded with an
asset swap spread of 191.5 basis points, down from 205.4 before
the auction but compared with 107 at the start of the year.
Analysts also the government's fall could lead to more
borrowing after the main political parties began talks on new
economic stimulus measures following the government's fall and a
deal among parties to push for early elections in October.
The government has already adopted some stimulus measures
and expects a budget deficit of around 4 percent of GDP.
The opposition introduced a package on Tuesday of 15
measures it says will cost 44 billion crowns ($2.13 billion)
annually over the next three years, or around 1.1 percent of
gross domestic product.
For a TABLE with May debt supply click on...... []
For a TABLE with Wednesday's auction click on.. []
(Reporting by Jason Hovet; Editing by David Stamp))
