Fixed Income Analysis /

Weekly Supply Preview - France sells a new 3Y OAT and a new 10Y OATei

    18 January 2021
    Published byUniCredit
    • Last week: Overall primary market activity from Italy, Germany, Austria, Spain, Portugal, Belgium and the Netherlands amounted to EUR 35bn. In terms of new benchmarks, Spain sold the new SPGB 0.1% Apr31 and Belgium the new OLO Oct31 via syndication, while Italy issued the new BTP 0.25% Mar28 and Germany the new Obl Apr26 via auction. Demand was overall healthy and new benchmarks were issued with rather low new issue premiums. Issuance activity was heavier at the 10Y bucket of the curve. Net supply was strongly positive as redemptions were nil and coupons amounted to EUR 4bn.
    • This week: Primary market activity is likely to decline compared to the first two weeks of the year. We expect EGB supply from France, Spain, Germany, Finland and Slovakia to amount to around EUR 20bn. Risks remain to the upside as some issuers might decide to launch new syndicated transactions. Primary market activity will involve both nominal and inflation-linked bonds and will be scattered across maturities. In terms of new benchmarks, France will launch the new OAT Feb24 and the new OATei 0.1% Jul31. Net supply will remain strongly positive due to a lack of redemptions and coupons. In addition to EGB issuance activity, the European Union will probably sell new SURE bonds via syndication.