Core and semi-core EGB debt markets.....>

EGB SUMMARY: Core and semi-core EGB debt markets dipped modestly in the European

morning but Italian debt was flying from the moment that the market opened.

Within a narrow 40 minute window the Bund-BTP spread collapsed from 141bp to

135bp but there was a modest push-back against this tightening over the

remainder of Monday.

- Some attributed the rally to French redemption money, 9bln of Italian coupons

this week and less fear of the election and prompted a short-covering rally.

- As the day progressed, German bonds began to improve mainly from the 30Y

sector of the curve. Heading into the close, the 30Y Bund was 2.6bp lower. 

- There was a lot of 15Y syndicated issuance. Belgian's 15Y Green OLO saw very

strong demand and ultimately the size was set at E4.5bln. Around the same time,

CPPIB Capital Inc. Guaranteed Canada Pension Plan Investment Board, issued a

Aaa/AAA rated EUR 15Y and later, the European Union announced it would issue a

15Y in the near future. 

- Core European debt markets did well, but USTs were the strongest on Monday and

the 10Y Bund-Treasury spread narrowed almost 3bp to 219bp.