HALISTER1: AUCTION PREVIEW: 5Y DSL Offers Value Cross-Market; Unlikely Swap

AUCTION PREVIEW: 5Y DSL Offers Value Cross-Market; Unlikely Swap

(Bloomberg) -- Netherlands to reopen 0% 01/2022 for EU2b-EU3b, with issue price set at 10am CET; 5Y issue seen as attractive versus semi-core and core peers and isn’t expected to be swapped.
  • ABN Amro (Kim Liu)
    • May well be the only reopening of the 5Y benchmark in 2016, depending on issuance size
    • DSTA could then decide to issue at low end of total 2016 bond target
    • 5Y benchmark looks very attractive on its own curve on an ASW basis; also cheaper than Finnish, Belgian and French 5Y benchmarks
  • Rabobank (Richard McGuire)
    • Don’t anticipate this tap will be swapped as DSTA strives to achieve its target of 5 1/2 years for average maturity of its outstanding portfolio (debt + swaps) at end-2016
    • 5Y DSL trades 2.1 standard deviations cheaper against Finnish 3.5% 04/2021, 1.8 cheaper versus OBL 0% 10/2021
  • JPMorgan (Gianluca Salford)
    • DSL 01/2022 trades with benchmark discount of almost 3bps relative to surrounding bonds, at upper end of 5Y DSL benchmark discount trading range over the past year
    • 5Y Netherlands trades cheap relative to Belgium
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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

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