AUCTION PREVIEW: Mixed Views on PGBs, Despite Large Concession
Source: BFW (Bloomberg First Word)
People
Michael Leister (Commerzbank AG)
Antoine Bouvet (Mizuho Financial Group Inc)
Arne Rasmussen (Danske Bank A/S)
Marco Brancolini (Royal Bank of Scotland Group PLC)
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UUID: 7947283
(Bloomberg) -- Portugal to sell EU750m-1b 2.875% 07/2026 at 11:30am CET; mixed views on the auction from analysts, though considerable concession over past week seen as supportive.
Alert: HALISTER1- Commerzbank (Michael Leister)
- Markets have made room for the auction, PGBs have significantly underperformed Spain, Italy
- Remain cautious on PGBs overall, particularly given Portugal’s sluggish issuance progress this year
- Mizuho (Antoine Bouvet)
- 10Y spreads vs Spain back to 1-month wides; decision by DBRS to maintain investment-grade rating removes risk of losing PSPP eligibility
- Issue trades rich on fitted curve, offers little relative value
- RBS (Marco Brancolini)
- Expect decent demand; recently revised down PGB issuance target, assume IGCP will minimize 2016 issuance, and govt will not boost cash buffer
- Continue to like front-end Portugal, as sub-5Y protected by LTRO-II, where a vast take-up is expected; expect some of the money taken by banks to be channeled into carry trades
- Danske (Arne Lohmann Rasmussen)
- PGBs underperformed strongly ahead of auction, widening ~30bps to bunds last week, despite DBRS maintaining investment grade rating
- Seen as positive that the market is set-up for today’s PGB supply
Source: BFW (Bloomberg First Word)
People
Michael Leister (Commerzbank AG)
Antoine Bouvet (Mizuho Financial Group Inc)
Arne Rasmussen (Danske Bank A/S)
Marco Brancolini (Royal Bank of Scotland Group PLC)
To de-activate this alert, click here
UUID: 7947283