AUCTION PREVIEW: Muted Supply Outlook Supportive for 10Y Bund
Source: BFW (Bloomberg First Word)
Tickers
2539Z GR (European Central Bank)
People
Martin Van Vliet (ING Groep NV)
Antoine Bouvet (Mizuho Financial Group Inc)
David Schnautz (Commerzbank AG)
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UUID: 7947283
(Bloomberg) -- Germany to sell 0% 08/2026 for EU5b at 11:30am CET; analysts optimistic on the sale given RV levels, specialness in repo, lack of supply ahead.
Alert: HALISTER1- ING (Martin van Vliet)
- This is the final auction before two-week dry-up in Eurozone govie issuance
- In RV, bond offers ~4bps pick-up in z-spread vs adjacent DBR 6.5% 07/2027, illustrates distortions of ECB’s QE program, where older, high-coupons with lower free-float trade expensive on core curves
- Fairly attractive valuations, coupled with specialness in repo (~40bps yesterday), suggests auction should proceed smoothly
- Mizuho (Antoine Bouvet)
- First reopening of the bond launched last month; in RV, the 20/2026-08/2026 roll has steepened in yields terms, reflecting decent auction concession
- On the curve, 9-10Y sector still offers most roll-down and carry in Germany, though 10Y sector is at less attractive levels than it was at launch of the bond
- Commerzbank (David Schnautz)
- Lack of euro area government bond supply until the first tap of OBL 10/2021 in two weeks’ time should be supportive for auction
- After disappointing metrics of bond’s launch, today’s auction metrics like bid-to-cover ratio, ‘tail’ and retention rate should compare favorably
Source: BFW (Bloomberg First Word)
Tickers
2539Z GR (European Central Bank)
People
Martin Van Vliet (ING Groep NV)
Antoine Bouvet (Mizuho Financial Group Inc)
David Schnautz (Commerzbank AG)
To de-activate this alert, click here
UUID: 7947283