Czech Bond Buyers ‘Cash-Rich’ Before Today’s Sale, SocGen Says
A Czech sale of bonds will draw “strong” demand today as mild inflation may delay an interest- rate increase and investors are “cash-rich” after a portion of government debt matured last month, Societe Generale SA said.
The government seeks to raise 6 billion koruna ($337 million) in the sixth offering of its 2.8 percent note due September 2013, according to a prospectus on the central bank’s website. The first, competitive part of the auction ends at noon in Prague.
The Czech annual inflation rate held steady at 2 percent in October, the statistics office in Prague said yesterday. That missed the central bank’s 2.2 percent forecast and the same median estimate of analysts surveyed by Bloomberg News.
“Softer consumer-price index may push back hike expectations; expect strong demand for the Czech bond,” Anne- Francoise Bluher, a fixed-income analyst at SocGen’s Prague- based unit, Komercni Banka AS, wrote in a report today.
The government’s 2.55 percent notes, first sold in 2005, matured on Oct. 18, with the outstanding volume at 57 billion koruna, according to data compiled by Bloomberg.
“Investors might be cash-rich” after the government repaid the older debt “which should support demand” at today’s auction, Bluher wrote.
At the previous auction of the 2013 debt on Sept. 8, the yield fell to a record-low of 1.993 percent as an issue of debt in euros earlier that week allowed the government to trim local supply, while investor demand rose on fiscal-austerity plans. Bids totaled 3.4 times more than the amount sold.
On the secondary market today, the yield on the security was little changed at 2.233 percent.
To contact the reporter on this story: Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
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