Yields on Czech bonds ease on healthy demand

By bne IntelliNews April 24, 2014

The Czech finance ministry sold CZK 11bn (EUR 400mn) in 2019, 2025 and 2036 government bonds at an auction on April 23, below the maximum planned amount of CZK 13bn, the central bank said.

The ministry sold CZK 3.6bn of the 6.8-year bonds that carry a fixed annual coupon of 1.5% and mature on October 29, 2019, down from CZK 7bn sold at the previous auction of the paper held on February 12, 2014. This was the 12th tranche of the issue that lured bids of CZK 8.5bn, down from CZK 9.5bn at the February auction. The average yield eased to 1.140% from 1.461%.

The ministry also sold CZK 6bn of the 11.5-year bond that carries a fixed annual coupon of 2.4% and matures on September 17, 2025. This was the second tranche of the issue that attracted bids of CZK 8.8bn, weaker than CZK 10.6bn worth of bids submitted at the previous auction of the paper held on March 12, when also CZK 6bn of the bonds were sold. The average yield edged down to 2.221% from 2.461%.

Although demand weakened for the 2019 and 2025 bonds it stayed strong providing coverage ratios of 2.4 and 1.5.

Demand for the 30-year bonds that carry a 4.2% coupon strengthened to CZK 2.3bn from CZK 1.8bn at the previous auction on January 29 helping cut the yield to 3.189% from 3.389%. This was the seventh tranche of the issue of which the ministry sold CZK 1.4bn, up from CZK 1.1bn sold in January.

Bonds with a maximum nominal value of CZK 40bn to CZK 60bn will be offered for sale in the second quarter of 2014, compared to CZK 50bn to CZK 60bn planned for the first quarter.

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