EM CEEMEA CREDIT: Binghatti: New $ Sukuk

• Italy will come to the market tomorrow to sell E2.5-3.0bln of the on-the-run 2.10% Aug-27 BTP Short Term (ISIN: IT0005657330) via auction. Note that the MEF announced that the BTPei line would not be on offer in August (in line with the precedent seen in recent years).
• Germany will come to the market on Wednesday, opening its new Nov-32 Bund in a revival of the 7-year segment by DFA. This is being done as a function of higher issuance requirements on the fiscal easing in the country. The coupon for the new line is to be confirmed tomorrow.
• Italy will return to the market on Thursday with a 5/10-year BTP / CCTeu auction. Details are to be confirmed today.
• Finally, Finland will hold an ORI operation on Thursday, with up to E0.4bln on offer. Details of the RFGBs on offer will be released the preceding day. 

NOMINAL FLOWS: This week sees no redemptions, as was the case last week. Coupon payments for the week total E0.6bln, of which E0.5bln are Italian. This leaves estimated net flows for the week at a positive E26.2bln, up from E22.5bln last week.

• RES 4: 0.8769 High Jul 28  
• RES 3: 0.8744 High Aug 7 
• RES 2: 0.8682 High Aug 8  
• RES 1: 0.8674 Intraday high 
• PRICE: 0.8662 @ 06:47 BST Aug 25
• SUP 1: 0.8597 Low Aug 14 
• SUP 2: 0.8562 50.0% retracement May 29 - Jul 28 upleg 
• SUP 3: 0.8540 Low Jun 30 
• SUP 4: 0.8514 61.8% retracement May 29 - Jul 28 upleg

Recent gains in EURGBP are considered corrective. A stronger recovery would refocus attention on the bull trigger at 0.8769, the Jul 28 high. On the downside, note that recent weakness resulted in a breach of key support at 0.8611, the Jul 31 low. The cross has also pierced the 50-day EMA, at 0.8621. A clear breach of these supports would instead highlight a stronger reversal. This would open 0.8562, a Fibonacci retracement point.

The EU, Belgium, Italy, Germany and Finland are due to hold auctions this week. The ESM has also sent a Request for Proposal with regards to an upcoming transaction. We pencil in issuance of E26.8bln for the week, up from E22.7bln last week.

For the full MNI EGB Issuance, Redemption and Cash Flow Matrix with a recap of issuance this week and a look ahead to the next two weeks of issuance, click here.  

• The ESM has sent a Request for Proposal with regards to an upcoming transaction. This means a syndicated transaction today or tomorrow looks likely. Given that the UK has a public holiday today, a transaction tomorrow would be our base case. We had flagged an ESM/EFSF transaction as likely in late August (although we thought EFSF was more likely).
• The EU will kick off auction issuance for the week today. On offer will be up to E2.5bln of the 2.875% Dec-27 EU-bond (ISIN: EU000A3K4EW6), up to E2.0bln of the 3.375% Dec-35 EU-bond (ISIN: EU000A4D8KD2) and up to E1.5bln of the 3.375% Oct-38 EU-bond (ISIN: EU000A3K4D74).
• Belgium will follow later today with a conventional auction. On offer will be a combined E2.3-2.7bln of the 3.00% Jun-33 OLO (ISIN: BE0000357666), the 2.85% Oct-34 OLO (ISIN: BE0000360694), and the 3.50% Jun-55 OLO (ISIN: BE0000361700).