EUROZONE ISSUANCE: EGB Supply - W/C 17 Feb (1/2)
Feb-14 16:41
Slovakia, Germany, Finland, Spain and France are all due to hold auctions in the upcoming week, whilst Italy is scheduled to launch its inaugural retail BTP Piu. The ESM is likely to hold a syndication with possible syndications also to come from Belgium and Germany. We look for estimated gross issuance for the week of E40.6bln (excluding the retail operation), down from E50.9bln this week.
- The ESM on Wednesday 12 February sent a Request for Proposal with regards to an upcoming syndicated transaction. We expect a transaction for Monday/Tuesday in the upcoming week, and had flagged this possibility in our daily publication.
- We pencil in a E2-3bln transaction size. Regarding the maturity on offer, we note that the ESM hasn’t issued a bond with longer than 10.5 years to maturity since 2018 and we would be surprised to see a longer maturity issued in the upcoming transaction. However, Greece’s borrowing under the ESM not due to be fully repaid until 2060 so a longer-dated transaction cannot be fully ruled out.
- Italy will launch its inaugural Feb-33 BTP Piu (ISIN: IT0005634792) in the upcoming week with books open between Monday and Friday. The BTP Piu will form part of the BTP Valore family and will include an option for an early redemption after 4 years as well as a step-up coupon. The minimum coupon rates are 2.80% for years 1-4 and 3.60% for years 5-8.
- On Monday, Slovakia will hold a SlovGB auction to sell the 3.00% Feb-28 SlovGB (ISIN: SK4000024683), the 3.75% Mar-34 SlovGB (ISIN: SK4000024865), the 3.75% Feb-35 SlovGB (ISIN: SK4000022539) and the 2.00% Oct-47 SlovGB (ISIN: SK4120013400).
- On Tuesday, Germany will sell E4.5bln of the 2.20% Mar-27 Schatz (ISIN: DE000BU22080).
- Also on Tuesday, Finland will hold a conventional auction to sell up to a combined E1.0-1.5bln of the 5-year 2.50% Apr-30 RFGB (ISIN: FI4000577952) and the 10-year 3.00% Sep-34 RFGB (ISIN: FI4000571104), this is in-line with our expectations.
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BOE: Taylor on the UK neutral rate: Between 2-3%
Jan-15 16:40
- "In my view, this level of a UK terminal rate makes sense as it sits somewhere between the Fed’s terminal rate (around 3%, as suggested by the Fed’s dot plot, or around 1% in real terms) and the ECB’s (around 2%, as suggested by Philip Lane in an interview, with reference to ECB, for a range of measures around 0% in real terms) which would be consistent with the recent historical pattern and with the UK having growth and demographic fundamentals somewhere in between the US and Eurozone."
US TSY FUTURES: BLOCK: Mar'25 5Y/30Y Ultra Bond Steepener
Jan-15 16:39
Latest Block post at 1117:40ET:
- +15,933 FVH5 105-31.25 post time offer vs.
- -3,648 WNH5 117-02, well through 117-07 post time bid
BOE: Taylor talks of risks both ways
Jan-15 16:37
- "If we were to misjudge, or be too late to recognise if this case 1 possibility were developing as the true scenario, then we would be using case 2 policies in a case 1 world"
- "We could end up with case 1 policies in a case 2 world, for example. And the risk of case 3 still isn’t necessarily zero either, so the Bank needs to be extremely alert to all real-time and forward-looking signals to get a clear read."
