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1.25% Aug-48 Bund

GERMAN AUCTION PREVIEW
  • Germany will come to the market this morning to sell E1.5bln of the 1.25% Aug-48 Bund.
  • This will be the second 30-year Bund auction so far this year. Four weeks ago the 0.50% Aug-50 Bund was tapped with E1.264bln allotted at a yield of -0.13%, a bid-to-cover of 1.19x and an bid-to-offer of 1.42x.
  • The 1.25% Aug-48 Bund was sold four times in 2020 (once in each quarter) and with the exception of the February 2020 auction saw very strong demand. The latter three auctions last year saw bid-to-covers ranging from 1.73-2.14x and bid bid-to-offers ranging from 1.95-2.48x.
  • Today's auction is likely to be the first 30-year issuance operation since the June 2020 syndication of the 0% Aug-50 Bund that will achieve a positive yield.
  • RV: We note that the spread between the 1.25% Aug-48 Bund and the 0% Aug-50 Bund has slowly widened since October. The 1.25% Aug-48 Bund now trades at close to a 3.3bp premium over the 0% Aug-50 Bund, up from 2.2bp in October.
  • Timing: Results will be available shortly after the auction closes at 10:30GMT.
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