EGB FUNDING UPDATE: Italy Q2 Funding Plan and MNI Expectations

Spain has announced a mandate for a syndication, while Italy and Germany are both due to hold auctions this week, and the EU and Belgium already held auctions. We look for estimated gross issuance for the week of E32.0bln, down from E43.8bln last week.

For the full document including more details on issuance this week and next week click here.

• Spain is likely to hold a syndication today after it announced a mandate for a new 15-year Obli maturing 31 January 2041 to take place in the “near future”. We pencil in a wide E5-10bln range for the transaction. The lower end of the range in line with previous issues, the upper end more consistent with the large syndications we have seen both in Spain more recently and in EGBs more generally this year.
  • The syndication was in line with our expectations as we wrote in our EGB Issuance, Redemption and Cash Flow Matrix that we looked for a Spanish syndication this week with either a long 15-year (2041) or 20-year maturity.
• This morning, Italy will hold a BTP Short Term and BTPei auction. On offer will be E2.50-2.75bln of the 2.55% Feb-27 BTP Short Term (ISIN: IT0005633794) - in line with our expectations - and E1.25-1.50bln of the 1.80% May-36 BTPei (ISIN: IT0005588881).
• Also today, Germany will hold a Green auction selling E1.5bln of the 1.80% Aug-53 Green Bund (ISIN: DE0001030757).
• Tomorrow, Germany will return to the market to hold a 15-year Bund auction. On offer will be E500mln of the 0% May-36 Bund (ISIN: DE0001102549) alongside E1.5bln of the 1.00% May-38 Bund (ISIN: DE0001102598).
• Finally on Thursday, Italy will return to the market to hold a 5/10-year BTP and CCTeu auction. On offer will be E3.25-3.75bln of the new 5-year 2.95% Jul-30 BTP (ISIN: IT0005637399), E2.5-3.0bln of the 10-year 3.65% Aug-35 BTP (ISIN: IT0005631590) and E2.5-2.75bln of the 1.10% Apr-33 CCTeu (ISIN: IT0005620460).
  • The launch of the new 5-year BTP and the 10-year on offer are both in-line with our expectations.

• RES 4: 94.75 76.4% retracement of the Dec 3 - Jan 13 bear leg
• RES 3: 94.35 High Feb 6 and key short-term resistance     
• RES 2: 93.50 High Feb 13
• RES 1: 92.83 50-day EMA                  
• PRICE: 92.65 @ Close Feb 24
• SUP 1: 91.78 Low Feb 20                                 
• SUP 2: 91.52 Low Jan 24 and a key near-term support 
• SUP 3: 91.10 Low Jan 20
• SUP 4: 89.68/88.96 Low Jan 15 / 13 and the bear trigger

A bull cycle in Gilt futures remains the underlying theme, meaning recent weakness still appears corrective for now. Initial resistance to watch is 93.50, the Feb 13 high. A break of this level would highlight an early bullish reversal signal and refocus attention on the key short-term resistance at $94.35, the Feb 6 high. On the downside a continuation lower would instead expose the next important support at 91.52, the Jan 24 low.

Austria and Italy are both due to sell bills this week, whilst Germany and France have already issued. We expect issuance to be E18.8bln in first round operations, a little lower than the E19.0bln last week.

• Today, Austria will look to issue E1bln of the 2-month Apr 24, 2025 ATB and E2bln of the 3-month May 30, 2025 Green ATB.
• Finally tomorrow, Italy will conclude issuance for the week with a BOT auction. On offer will be E2bln of each of the 2-month May 14, 2025 BOT and the 5-month July 31, 2025 BOT.

For more on future auctions see the full MNI Eurozone/UK T-bill auction calendar here.