Austria`s Federal...........>

AUSTRIA AUCTION PREVIEW: Austria`s Federal Financing Agency on Tuesday taps the

5Yr 0.00% Jul-23 RAGB and the 10Yr 0.75% Feb-28 RAGB for a combined E1.15bln.

- BACKGROUND: The 5Y Jul-23 was previously tapped on Feb 6, selling at avg yield

of 0.189% and bid-to-cover of 2.23x, while the Feb-28 last sold on May 8 at avg

yield of 0.707%, and bid-to-cover of 2.21x. This sale will put Austria at about

halfway through its 2018 planned issuance of up to E23bln.

- RV: Austrian yields have dropped amid a flight to quality in May triggered by

Italian political drama, with the 5Yr yield down 17bps in the past month to

-0.028%, and the 10-year down 8bps to 0.684%. Indeed, the belly of the curve has

outperformed every other segment in the past month, while the 10Y has

underperformed. The 10-year spread over Bunds hit a 2-year high of 37.0bps on

May 29, and while it has come back to 27.8bps, the spread is still 9bps wider

compared with a month earlier when the bond was last tapped, and 19.9bps outside

the 2018 low. As such, it looks a bit cheap. The 5-year has fared better, with

the spread over Bunds up by just 1bps in the past month.

- RESULTS: Bidding closes at 0900BST, with results due around 15min later.