Austria comes to market.....>

AUSTRIA AUCTION PREVIEW: Austria comes to market on Tuesday, selling a combined

E1.38bln in two re-opened RAGBs: 0.50% Feb-29 RAGB and 2.40% May-34 RAGB.

- BACKGROUND: The 10-Yr benchmark Feb-29 was last tapped on May 7, at average

yield 0.237% and bid-to-cover of 2.16x. Despite being the 15-Yr benchmark, the

May-34 has not been re-opened since January 2018.

- RV/HISTORY: A global flight to safety has benefited RAGBs, with the yield on

the 10-Yr falling to post-2016 lows. Indeed, the Feb-29 has been on an almost

relentless rally since launching in January 2019, with the yield dropping 42bps

to a low of 0.116% as of June 3 (also, like many global 10-Yrs, at a post-2016

low). Versus fellow semi-core EGB France, 10-Yr RAGB spreads have moved further

inside since the beginning of May (8.2bps from 5bps). However, there has been a

mild underperformance vs Germany of late, with a widening in the 10-Yr spread of

about 3bps to 31.9bps since mid-April. Swap spreads have remained steady around

21bps for the past two months. 

- TIMING: Results are due around 1015UK time after the auction closes.