December 20, 2019 / 11:56 AM / a month ago

UPDATE 1-Czech finance ministry sees lower gross financing need in 2020

(Adds details, background)

PRAGUE, Dec 20 (Reuters) - The Czech Finance Ministry plans a lower gross financing need of 271.1 billion crowns ($11.84 billion) in 2020, down from 331.2 billion crowns in 2019, the ministry said on Friday as it released its new debt-financing strategy.

As part of its strategy, it said it would issue government bonds worth at least 120 billion crowns from along the curve on the domestic market in 2020.

The ministry also said it planned to continue using euro-denominated bonds issued on the domestic market to help fully or partly cover euro financing needs.

The financing need includes a planned central state budget deficit of 40 billion crowns, 158.6 billion crowns in maturing state bonds and a 1 billion-euro redemption from a maturing eurobond.

The Czech Republic, with the lowest borrowing costs of non-euro zone peers in central Europe, last issued bonds on international markets in 2012 as conditions at home in recent years have been better.

For the first time, it issued a euro-denominated bond on the domestic market this year and said in its strategy it could continue with new bonds of this type if favourable conditions from negative or zero yields in euro bond markets, along with interest from primary dealers, remained.

“The alternative, in the form of syndicated issuance of medium-term and long-term government bonds on foreign markets under foreign law, will depend primarily on actual conditions on domestic and foreign markets,” the strategy report said.

The ministry also planned on possible new crown-denominated bond issues with maturities from 2024, it said.

On secondary markets, it planned to continue tap sales and exchange operations. It also planned more retail bond sales.

Its financing need next year is roughly 4.6% of gross domestic product. State debt for the Czech Republic, rated Aa3 by Moody’s, is estimated to fall to 28.9% of GDP in 2020 from 29.4% this year, less than half the European Union average of 80%.

The ministry said it saw gross financing needs falling by 8 billion crowns in 2021 and by 23 billion crowns in 2022 compared with 2020, because of lower redemptions.

$1 = 22.8850 Czech crowns Reporting by Jason Hovet; editing by Larry King Editing by Alison Williams

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