Research (Conseq)
Markets  |  March 20, 2013 11:14:58

Ministry wants to issue bonds worth almost 100 billion CZK


The past year has historically offered the best conditions under which the state was able to borrow their funding. While in 2007, the Treasury borrowed for ten years for around 4-5%, last year began ten Czech bond yield of 3.5% during the year and fell to a historic low of 2%. Ministry of Finance, it also used the funding to build reserves for future years.

In terms of the possibility of absorption is not a planned volume of one hundred billion for the market no problem. Rather, it is a lower level of issuance activity that will support bond prices. Prospects for future years, however, more pronounced decrease in revenues promises. High preference leftist opposition before parliamentary elections in the 1st half of 2014 creates a risk of higher budget deficits in the coming years compared to the plan's current on the basis of credit rating agencies the Czech Republic holds a stable outlook. The horizon of the next year there will be no reduction in the absolute debt, gross borrowing needs or interest expenditure in relation to GDP and government revenues.

The absolute level of income then also it is not what it to the Czech bond market attracted crowds of investors. For the state, this level of contrast advantageous. The question is what the state is able to borrow funds to undertake. It is well known that the state tends to kasa unproductive expenditure and short term debt financing becomes chronic darning social system and fed bureaucracy. Incantation pro-growth measures are then chases political parties from left to right, the economy does not grow too much, however, unless growing structural problems.

Re prepared emissions savings government bonds (SSD) is certainly an investment alternative for residents, but it is necessary to count with specific conditions for early sales and limited liquidity, which may not be suitable for everyone. Likewise automatically assume that the state is again offer a significantly better conditions than it is able to finance the market, as it was in the past.

 

John Schiller,

Portfolio Manager

Conseq Investment Management, Inc.

 





Ministerstvo chce vydat dluhopisy za téměř 100 miliard Kč

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