AUCTION PREVIEW: The Portuguese Debt.......>

PORTUGAL: AUCTION PREVIEW: The Portuguese Debt Management Office will come to

market on Wednesday for a combined E1.0-1.25bln. On offer are the 1.95% Jun-29

PGB and the 2.25% Apr-34 PGB.

- BACKGROUND: Portugal has made considerable progress on issuance so far this

year having met 49.1% of the full-year target. The 1.95% Jun-29 PGB was last

tapped on April 10 with E0.60bln sold at an average yield of 1.14% and

bid-to-cover ratio of 2.28x. The 2.25% Apr-34 PGB was last re-opened on February

13 with E0.30bln sold at an average yield of 2.05% and bid-to-cover ratio of

2.299x.

- RV/HISTORY: Portuguese yields have followed core EGBs lower since November,

while the spread over bunds has narrowed. Indeed, the spread of the 10-year

benchmark yields has fallen by nearly 50bps since the beginning of the year. The

1.95% Jun-29 PGB serves as the 10-year benchmark and trades at a yield of

1.093%, which is a fresh low and 63.8bp above the comparable EUR swap. The 2.25%

Apr-34 PGB is the 15-year benchmark, which has also hit a new low of 1.571%. 

- TIMING: Results are due shortly after the auction closes at 1030BST.