Yields on Czech two-year government bonds fell deeper into negative territory at an auction on December 8, encouraging the issuer to raise the offer.

The finance ministry sold CZK14.5bn (€537mn) in two-year zero coupon bonds, above the maximum sales target of CZK8bn, the central bank said. The average yield fell to -0.354% from -0.349% at the previous auction held two weeks ago.

This was the fifth tranche of the issue after a pilot in early September, when the average yield stood at -0.212%. Demand at the latest auction strengthened as the value of bids increased to CZK14.5bn from CZK12bn submitted at the November 25 auction.

The Czech government is enjoying negative funding costs on maturities of up to five years thanks to the abundant liquidity in the financial sector, which is triggered by the central bank’s currency interventions. Still, the ministry has said it is not willing to extend its issuance activity in a bid to stabilise debt at current levels.

Czech Finance Minister Andrej Babis, however, said last month that issuance will be stronger in 2016 as the ministry plans to take advantage of the low borrowing costs. The ministry plans to issue at least CZK150bn in new debt next year.