HALISTER1: AUCTION PREVIEW: 30Y Netherlands Cheap, Not Expected to Swap

AUCTION PREVIEW: 30Y Netherlands Cheap, Not Expected to Swap

(Bloomberg) -- Netherlands to sell EU0.75b-1.25b of DSL 2.75% 01/2047 bonds at 11am CET. Analysts see bond as cheap vs shorter-dated peers, and vs Germany; expect support from significant upcoming redemptions.
  • ABN Amro (Kim Liu)
    • Don’t expect the bond to be swapped back; offers value vs shorter DSLs in long-end; 25s30s spread attractive vs Germany
    • 10s30s at tightest lvls of 2016, though far from lows of 34bps in April; increased QE may flatten 10s30s further
  • JPMorgan (Gianluca Salford)
    • Auction bond has underperformed significantly vs DSL 01/2042 over past month, now pick up of almost 10bps, close to the highs of last year
    • Cross market, 10Y+ sector in core space is in general cheap vs. Germany
  • Rabobank (Richard McGuire)
    • Central bank efforts to stimulate a recovery will be self-defeating, only lead to more stimulus; favor flatter core curves, see auction as opportunity to extend duration
    • 25s30s DSLs trade ~5bps cheaper vs Germany; favor owning auction bond vs German 2046
    • Auction should find support from EU11.4b of Dutch redemptions, due on April 15
  • UniCredit (Elia Lattuga)
    • DSL Jan47 has cheapened, currently at attractive lvls vs 01/2042; redemptions of EU13.7b from old DSL, as well as EU22b from Germany, Finland should supportive
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
3584485Z NA (ABN AMRO Group NV)

People
Kim Liu (ABN AMRO Group NV)
Elia Lattuga (UniCredit SpA)
Gianluca Salford (JPMorgan Chase & Co)
Richard McGuire (Rabobank International)

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