AUCTION PREVIEW: Spain 30Y Seen Rich in Repo, 10Y Cheap Vs Peers
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
People
Antoine Bouvet (Mizuho Financial Group Inc)
Edgar Da Silva Figueira (Banco Santander SA)
Jaime Costero (Banco Bilbao Vizcaya Argentaria SA)
Marc-Henri Thoumin (Societe Generale SA)
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UUID: 7947283
(Bloomberg) -- Spain to sell 0.4% 04/2022, 1.30% 10/2026, 5.15% 10/2028, 2.90% 10/2046 for EU4-5b, equivalent to ~36k bund futures, EU5m/bp in risk terms.
- Analysts see 10/2026 offering value vs rich neighboring bonds, expect 30y support from rich repo levels; 5y seen offering value vs shorter bonds
- Mizuho (Antoine Bouvet)
- 5s10s15s butterfly is close to the top of its range, which could help demand for 10/2026 at the sale
- Some of the steepening in 5s10s may be down to the prospect of the last TLTRO-II
- 5Y is expensive on the fitted curve, but the richening of the 4-5Y sector suggests the auction should go well
- 30Y issue trades special on repo, indicating that some dealers may be short of this bond and would look to cover at the auction
- BBVA (Jaime Costero)
- Richening of 5y bond to BTPs seems excessive, expect the spread to tightening of this spread toward 55-60bp area.
- 10/2026 has seen strong concession against the 04/2027 and 07/2030, cheapening by around 3bps over the past few days
- 30y issue has been richening into the auction, and sits very special on repo
- Santander (Edgar da Silva)
- 04/2022 issue is most appealing as it trades cheaper than its immediate neighbours despite appearing around 3bps rich to the curve
- Shorter SPGB reference bonds are 04/2021 (7bps rich), 07/2021 (6bps rich) and 01/2022 (5bps rich)
- 10/2026 is even attractive vs the rich 01/2029; offers an interesting pick-up in the auction and an opportunity to shorten portfolio duration
- 30y issue doesn’t represent any RV trade opportunity on the SPGB curve
- Tesoro is scheduled to takes a break from issuance until April 6 following the sale
- 04/2022 issue is most appealing as it trades cheaper than its immediate neighbours despite appearing around 3bps rich to the curve
- SocGen (Marc-Henri Thoumin)
- SPGB ASW curve has directionally steepened over the past fortnight, with the auction bonds showing limited pre- auction cheapening
- Both 10/2026, 10/2028 issues offer good pickup vs shorter-dated maturities; both have steepened in ASW over the past two weeks, and look steep vs BTPs; expect some convergence after the sale
- Relative to the curve, 10s30s SPGB has reached a high of late; 30y issue offers some value against 2026 bonds, which can help demand
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
People
Antoine Bouvet (Mizuho Financial Group Inc)
Edgar Da Silva Figueira (Banco Santander SA)
Jaime Costero (Banco Bilbao Vizcaya Argentaria SA)
Marc-Henri Thoumin (Societe Generale SA)
To de-activate this alert, click here
To modify this alert, click here
UUID: 7947283