Halister News

(Bloomberg) -- Auction supply is relatively heavy in nominal terms at EU14b, though fairly light in duration. EFSF may issue, while Austria also flagged as a possibility. Large redemptions from France may be reinvested toward the end of the week, as cash-flows for the month remain very supportive.

• Citigroup estimates net cash requirement for July in EGBs is - EU121b, the most supportive month all year; in August, gross issuance looks set to fall to its lowest monthly level so far in 2017 at just EU46b
• Seasonal drop in EGB supply has tended to be associated with firmer government bond markets over July, which tends to provide a benign backdrop for rates markets over the summer months: Citigroup
• Outside of auction supply, JPMorgan have been recommending shorts in long-end Austria vs Germany given expectation of a new 10Y+ Austria sale in coming weeks
  • EFSF sent an RfP to banks for a potential syndicated issue next week; their deals tend to weigh on core bonds into pricing
• SUPPLY/REDEMPTIONS: Auction supply may total EU14b, equivalent to around EU11m/bp or 74k bund futures in risk terms
• July 19: Germany to sell 2.5% 08/2046 for EU1b
• July 20: Spain to sell 0.05% 01/2021, 0.40% 04/2022, 1.45% 10/2027; Barclays estimates the size at EU4.25b
• July 20: France to sell 0% 02/2022, 0% 05/2022, 2.25% 10/2022 for EU6.5-7b as well as long- dated I/L bonds
• There’s around EU36b in redemptions from France due to be repaid on July 25, this may be reinvested from late next week due to T+2 settlement; the bonds are an old 12y I/L (EU16.4b) and an old 5y (EU19.3b)
• U.K. to sell new 0.75% 07/2023 for GBP2.75b on July 19; equivalent to around 12k gilt futures
• NOTE: Auction calendar is ECO20 WE

To contact the reporter on this story: Stephen Spratt in London at sspratt3@bloomberg.net To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net Neil Chatterjee