HALISTER1: AUCTION PREVIEW: 15y Spain Offers Value, 5y Looks Rich

AUCTION PREVIEW: 15y Spain Offers Value, 5y Looks Rich

(Bloomberg) -- Spain to sell 0.75% 07/2021, 1.30% 10/2026 and 1.95% 07/2030 for EU3-EU4b at 10:30am CET.
  • Analysts highlight 15Y as offering value on the curve, while 5y looks rich; usual tightness in repo, performance on curve bodes well for auction
  • Santander (Edgar da Silva)
    • If top-end of range sold, Tesoro will have placed 80% of issuance target this year, compares with 73% on average at this stage over past five years, 1 percentage point more than at this point last year
    • Auction offers good opportunity to switch into the 07/2030 SPGB and out of the expensive 01/2029 SPGB in RV terms
    • 10Y looks attractive in RV too, sits ~1bp cheaper than fair value on fitted curve
    • 07/2021 SPGB does not offer attractive RV pick-up in that part of the curve
  • ING (Benjamin Schroeder, Martin Van Vliet)
    • SPGBs have not fully recovered from spread widening seen going into the first supply after summer break, though has outperformed BTP peers
    • Of the bonds on offer, 15y has seen some cheapening on the curve, with 10s15s steepening back to pre-Brexit levels
  • Mizuho (Peter Chatwell, Antoine Bouvet)
    • 07/2021 has a history of being special on repo and has performed well on the curve, suggests the auction will be supported
    • Despite recent reopenings, 10Y Spain is expensive on 5s10s compared to BTPs
    • Choice to tap 15y SPGB was a surprise, as believe Tesoro will want to launch a new benchmark in this sector in the coming weeks
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Antoine Bouvet (Mizuho Financial Group Inc)
Benjamin Schroeder (ING Groep NV)
Edgar Da Silva Figueira (Banco Santander SA)
Martin Van Vliet (ING Groep NV)
Peter Chatwell (Mizuho Financial Group Inc)

To de-activate this alert, click here

UUID: 7947283