Halister News

(Bloomberg) -- Spain to sell 0.25% 01/2019, 0.4% 04/2022, 4.4% 10/2023 for EU4-5b at 10:30am CET. Analysts are optimistic on the new 5-year given value relative to shorter maturities, attractive yield pick-up versus peers.

• Natwest Markets (Giles Gale)
  • Recommend using sale to enter 2s5s flatteners; 5-year on- the-runs tend to see strong demand, given the preference from domestics
  • PSPP expectations will also help dealer bidding; coupons and redemptions in late January worth EU28.5b should support

• SocGen (Marc-Henri Thoumin)
  • New 5-year is quoted around 10.5bps in z-spread terms over the current 5-year. For a nine-month maturity extension that offers a more interesting pick-up than prior rolls; still, five-year area offers limited RV on the curve
  • SPGB 10/2023 looks rich vs other SPGBs, however the 2023 sector also offers some of best carry on the curve, at around 8bps/3-months, which could help demand

• Santander
  • Estimate the fair value of the new 5-year at 01/2022s +6bps; see this auction as a good opportunity to switch out of any of the rich 2022-23 bonds
  • 2-year issue trades cheaper than its neighbors, and offers a good opportunity to switch out of the 10/2018 which trades 7bps rich, also like owning bond vs BTPs (currently ~11bps), looking for a widening back to the 17bps mark seen in Nov.

• Mizuho (Peter Chatwell)
  • Optimistic about the prospect of the new 5-year given the healthy yield pick-up it should offer vs 07/2021 of around +20bps, the issue will also be only the second 2022 issue on the curve