AUCTION PREVIEW: 10y DSL Attractive Vs Germany, Semi-Core
(Bloomberg) -- Netherlands to sell EU1.5b-2.5b 0.5% 07/2026, tap auction to begin at 10am CET; rich repo levels, cross-market levels vs Germany outright and on curve seen as supportive.
- ABN Amro (Kim Liu)
- Issue won’t swap, will be the penultimate auction of the DSL 07/2026; Dutch 10y sector looks cheap vs both shorter and longer maturities
- Cross-market, 10y DSL has underperformed 10y BGBs and RFGBs, out of risk/reward perspective would rather avoid these expensive peers in favor of 10y DSL
- Rabo (Richard McGuire)
- Given risks around ECB changing QE parameters, gilt market concerns, reluctant to suggest using this DSL auction to enter strategic curve flatteners
- Focus on RV opportunities, see bond as cheap vs DSL 2024 and German 10y benchmark
- Mizuho (Antoine Bouvet)
- 10Y point on Dutch curve offers value on 7s10s vs Germany, also supportive from RV perspective is cheapening of 07/2025-07/2026 roll, despite shorter bonds underperforming other parts of the curve
- Auction bond trades special on repo, indicating a short base of amongst dealers
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
Tickers 2539Z GR (European Central Bank)
People Kim Liu (ABN AMRO Group NV)
Antoine Bouvet (Mizuho Financial Group Inc)
Richard McGuire (Rabobank International)
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