EUROZONE ISSUANCE: EGB Supply
Germany is due to return to the market while Italy and Belgium are also still due to issue this week. France, Slovakia and the Netherlands have all to the market already. We pencil in estimated gross issuance for the week at E25.3bln, down from E30.0bln last week. We also note the huge redemptions and coupon payments.
- This morning, Italy will come to the market to hold a 5/10-year BTP and CCTeu auction, including launches of 5/10-year BTPs with a total auction size of up to E9.75bln: E3.50-3.75bln of the new 5-year 3.35% Jul-29 BTP (ISIN: IT0005584849; we had only expected an outside chance of this being launched this week - instead thinking a February launch was more likely), E4.0-4.5bln of the new 10-year 3.85% Jul-34 BTP (ISIN: IT0005584856; in line with MNI's expectation) and E1.0-1.5bln of the 1.15% Oct-31 CCTeu (ISIN: IT0005554982).
- Also this morning, Germany will return to the market to hold a 15-year Bund auction. On offer will the E1bln of the on-the-run 1.00% May-38 Bund (ISIN: DE0001102598) alongside E500mln of the 3.25% Jul-42 Bund (ISIN: DE0001135432).
- Italy is due to launch a new retail-only 6-year Mar-30 BTP Valore (ISIN: IT0005583478) this week. Books opened on Monday and already stand at E11.05bln sold across the first 2 days (slightly higher than the E10.63bln across the first two days for the 4-year in June and in excess of the E9.31bln seen for the 5-year in October).
- Note that subscriptions for the next retail-only Belgium State Bonds (Bons d’Etat) opened on Thursday 22 February. Belgium plans to launch a new 1-year issue (ISIN: BE3871294240) and a new 3-year issue (ISIN: BE3871295254). Takeup on the first two days has been very low: E223mln in total for the 1 year (E146mln on day 1 and E77mln on day 2) and E10mln of the 3-year (E5mln on each of day 1 and 2).
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EUROZONE ISSUANCE: EGB Supply - W/C 29 January (3/3)
Possible syndications:
- Belgium: We pencil in a second Belgian syndication of 2024 this week. The most likely new issue in our view is probably a new 30-year OLO. The BDA has also noted that it plans for one new medium-term OLO to be launched in the year which could potentially be launched in this window rather than the 30-year OLO. We see an Oct-30 OLO as the most likely maturity (potentially Oct-29). There is a current coupon gap in the OLO curve around this area.
- Greece will potentially also hold a syndication this week, with a launch of a new 10-year GGB most likely. Issue sizes over past few years have generally been E3.0-3.5bln, but given the strong demand at other EGB syndications recently, we see a chance that this deal is potentially upsized.
NET NOMINAL FLOWS: This week redemptions totalling E32.7bln: E14.9bln from an Italian BTP Short Term, E17.6bln of a formerly 15-year Spanish Obli and E0.25bln from an Italian sinkable private placement as a result of Ammassi Aima. Coupons for the week total E8.8bln: E4.5bln Italian, E3.4bln Spanish and E1.0bln Greek. This leaves estimated net flows for the week at positive E4.9bln, down from E20.8bln last week.
For the full MNI EGB Issuance, Redemption and Cash Flow Matrix see the full PDF here.
USDCAD TECHS: Sights Are On The Bull Trigger
- RES 4: 1.3661 High Nov 27
- RES 3: 1.3623 61.8% retracement of the Nov 1 - Dec 27 bear leg
- RES 2: 1.3608 High Dec 13
- RES 1: 1.3542 High Jan 17 and the bull trigger
- PRICE: 1.3443 @ 06:49 GMT Jan 29
- SUP 1: 1.3415 Low Jan 22
- SUP 2: 1.3343 Low Jan 12
- SUP 3: 1.3288/3177 Low Jan 5 / Low Dec 27
- SUP 4: 1.3093 Low Jul 14 and key support
USDCAD maintains a firmer tone and the latest recovery reinforces a bullish theme. The latest short-term pullback is - for now - considered corrective. Sights are on 1.3542, the Jan 17 high and bull trigger. A break of this level would confirm a resumption of the bull cycle that started Dec 27 and open 1.3623, 61.8% of the Nov 1 - Dec 27 bear leg. Initial support is 1.3415, the Jan 22 / 26 low.
EUROZONE ISSUANCE: EGB Supply - W/C 29 January (2/3)
- Spain will look to kick off February issuance on Thursday with a Bono / Obli / ObliEi auction. On offer will be the 1.45% Apr-29 Obli (ISIN: ES0000012E51), the 0.10% Apr-31 Obli (ISIN: ES0000012H41), the on-the-run 10-year 3.25% Apr-34 Obli (ISIN: ES0000012M85 – for its first reopening since the syndicated launch) and the 2.05% Nov-39 Obli-Ei (ISIN: ES0000012M69). The auction size will be announced this afternoon. The lack of any nominal bonds with a maturity longer than 10-years makes us more confident we will see another Spanish syndication soon. Most likely would be a new 30-year Oct-54 Obli for E5-7bln. We pencil in a possible launch in the W/C 5 February.
- France will also look to come to the market on Thursday to hold a LT OAT auction with E11.5-13.0bln on offer. We think that this will be the largest target size at a LT OAT auction (at least since the beginning of 2019). On offer will be the on-the-run 10-year 3.50% Nov-33 OAT (ISIN: FR001400L834), the off-the-run 16-year 0.50% May-40 OAT (ISIN: FR0013515806), the on-the-run 20-year 2.50% May-43 OAT (ISIN: FR001400CMX2) and the on-the-run 30-year 3.00% May-54 OAT (ISIN: FR001400FTH3).
- Cancelled auction: Note that Belgium’s auction, originally scheduled for today, was cancelled in lieu of the 10-year OLO syndication held on 9 January.
