Halister News

(Bloomberg) -- Austria to sell 6.25% 07/2027, 0.75% 10/2026 for a combined EU1.1b at 11:15am CET. Analysts highlight the recent concession seen in both bonds, ongoing scarcity issues in Austrian debt, and specialness in repo, which suggests a short base and hence demand to cover positions.

• Commerzbank (Michael Leister)
  • Expect good demand at auction as scarcity considerations are becoming increasingly relevant for Austria
  • 35% of 2y-31y RAGBs currently trading below depo rate, hence forcing central bank out the curve
  • Average maturity of PSPP purchases reached a record of 11.4Y in June, highest among semi-core

• ING (Ben Schroeder)
  • The 6.75% 07/2027 is an old 30Y bond which has been trading as much as 8bps rich vs 10Y on-the-run 10/2026 - - this is in line with the “old vs new” bond dynamic seen in QE environment
  • The bond has since cheapened slightly, though still trades more than 2bps below the on-the-run in z-spreads
  • Repo indications show 07/2027 traded special yesterday, but less so than the 10/2026

• Unicredit (Alessandro Giongo)
  • RAGBs looks cheap vs Germany, Netherlands in z-spread; in particular, 07/2027 has cheapened to 36bps vs Germany; also cheaper by 15bps vs DSL 01/2028, the highest level seen in a year)
  • 10Y looks attractive in Z-spread terms vs DSL 07/2026, at 11bps cheaper

• Mizuho (Antoine Bouvet)
  • Semi-core spreads have been tightening strongly following surprise Brexit, showing hunt for yield has been supportive of markets such as Austria
  • 07/2027 has been notable underperformer on Austrian curve; 9s11s RAGBs steepened sharply vs OATs, bunds despite being historically the flattest
  • Bond was trading special on repo, hinting at a short base among dealers; expect 07/2027 auction to go well because of concession and potential short-covering demand