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EGB Supply for W/C 28 June

EUROZONE ISSUANCE

We estimate the upcoming week will see E25.3bln sold via auction from Belgium, Italy, Spain and France and pencil in a further E14bln for the second NGEU syndication, summing to total nominal gross issuance of E39.3bln for the week, up from E23.8bln this week.

  • Belgium is due to kick off issuance on Monday morning with E3.3-3.8bln on offer: the 10-year benchmark 0% Oct-31 OLO, the 1.25% Apr-33 Green OLO and the 30-year benchmark 1.70% Jun-50 OLO.
  • The EU is likely to hold a dual-tranche long-dated transaction on Tuesday, in our view, and we pencil in E14bln for the transaction. But it could range anywhere from E10-20bln (the former if it is a single tranche).
  • Italy will end Q2 issuance on Wednesday, looking to sell MT and LT BTPs. Details will be announced later today but we look for a smaller auction size of around E5bln following the syndicated launch of the new long 7-year CCTeu this week.
  • Spain will be first to issue on Thursday with the 0% Jan-26 Bono, the 1.40% Apr-28 Obli, the 1.00% Oct-50 Obli and the 0.70% Nov-33 Obli-Ei on offer. The target amount will be announced on Monday.
  • France will conclude issuance for the week on Thursday with E10-11bln of LT OATs on offer: the 0% Nov-30 OAT, the 0% Nov-31 OAT, the 1.25% May-36 OAT and the 0.50% May-40 OAT. We note that this will be the first time in 2021 a LT OAT auction has been held without a 30+ year OAT being auctioned and think this could mean that we see the new 30-year OAT (which is scheduled for H2) be issued via syndication on either 6/13 July. We assign a 70% probability to a syndication on one of these dates.

NET NOMINAL FLOWS: There are E13.3bln of no redemptions due in the upcoming week, of which E13.0bln are an Italian CTZ. Coupons sum to just E0.5bln. This would leave net nominal flows at E25.5bln for the week, up from E19.8bln this week. Although, as we noted above, this will largely depend on the size of the NGEU syndication.

For more details see the MNI EGB Issuance, Redemption and Cash Flow Matrix here.

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