MNI INTERVIEW: DZ Bank New Primary Dealer For Austrian Paper

Austria's Treasury continues to enjoy strong demand for its debt issuance, Managing Director of the debt management office Markus Stix told MNI as the agency prepares to sell between EUR43 and 47 billion of debt in 2026.

"Being predictable and communicating clearly with the market is part of this very conservative funding strategy," Stix said in an interview. "As a relatively small EGB issuer, we are not the sovereign benchmark in Europe. Therefore we can be flexible in terms of EMTN issuance."

Stix spoke to MNI ahead of the publication of Austria's 2026 funding plan on Thursday, which predicts total sales in the coming 12 months at a similar level to 2025's EUR 45 billion.

"(Around) 45% of our RAGB funding volume will be raised via auctions, and about 20% will be financed with our own quota issuance or bilateral taps. One third will be via syndications," he said.

Stix said both primary dealers and investors have been happy over the last two years, with the use of own-quota issuance, and the agency will sell own quota issuance "on a daily basis thereby helping the market."

"Roughly 40% of our gross borrowing is in the short-term format. Therefore there is a lot of supply for the short-term investor community also next year," he said. 

STRONG DEMAND

Stix said the debt managers had seen strong demand across the curve this year from both asset managers and propriatary firms.

"What we have seen in 2025 is an increased demand by bank treasuries, additionally we see higher turnover volumes from pension funds and the hedge fund community."

"We experience demand along the entire curve. In terms of tenors, Austria has the unique situation that we also have an ultra-long segment," he said.

Stix also noted the increased secondary market turnover in 2025, up by around 25% compared to last year, and, with a record turnover of over EUR 350 billion.

To help improve depth in the market, Stix said a new primary dealer will be admitted next year in Germany's DZ Bank.

GREEN ISSUANCE

Austria's retail issuance product, the Bundesschatz, also has six-month and four-year green lines, and "in those segments we were able to increase our green retail volumes," Stix said, highlighting that "around 8% of our gross borrowing next year will be in the green format," a larger proportion than in comparable issuers like France.

"Currently we have two existing green bonds outstanding, which mature in 2029 and 2049. There is some room for tapping these bonds, but issuing a new line in the green format is definitely an option as well."

"Austria is the only sovereign which issues green T-bills," he said, including three- and six-month tenors.

NEGATIVE RATINGS OUTLOOK

Three credit rating agencies have currently assigned a negative outlook to Austria even as its rating remains high. "Negative outlooks can be seen as an incentive for improvements. With the new government in place since May, we have clearly seen the pursuit of such changes, for example, by delivering a double budget for 2025 and 2026 and the commitment for fiscal consolidation."

The forecast for growth is improving, he said adding that if meeting the forecast growth in the upcoming years "we are on a good path". 

"However, there are still some question marks remaining," he said.