The bonds opened little stronger, but some traders tried to push 4-year benchmark lower ahead of the tender. The results of the tender really surprised, as investors bids reached CZK 14.3 bn, while the Finance Ministry offered only CZK 8 bn. Finally, they raised the amount by CZK 1.7 bn, because they sold slightly less bonds in previous tenders than planed. Average yield stood at 2.51 %, little different from the market level. However, it wasn’t the last surprise. The Ministry announced a new tender of 10-year benchmark (CZK 7 bn) on June 8. Moreover they raised also T-Bill issuance calendar by CZK 5 bn. Hence the state will borrow in Q2 CZK 12 bn more than initially announced.. We do not know real motivation of the Ministry, it should not be lack of cash in the state budget, because it remains in boundaries of the plan. Maybe they want to use current low interest rates, because they believe in their rise later this year. Today the calendar is empty, hence the market may track core markets and digest yesterday’s steps of the Finance ministry.
(CSOB - Investment research)