EGB Supply - W/C 27 November, 2023

The EU, Italy and Germany are due to issue in the week ahead. We pencil in gross nominal issuance of E15.6bln, up from E9.5bln this week.

• The EU will kick off issuance for the week on Monday with its last EU-bond auction of 2023. Up to E2bln of each of the 4-year 2.00% Oct-27 EU-bond (ISIN: EU000A3K4DS6) and the 10-year 2.75% Feb-33 Green EU-bond (ISIN: EU000A3K4DW8) will be on offer. Note that the European Commission said that in 2024 there would be a “very heavy pipeline” of NGEU issuance after the slowdown seen in H2-24 issuance. See our Policy Team’s brief here.
• Wednesday will see Italy come to the market to hold its last 5/10-year BTP and CCTeu auction of the year. We look for up to E3.5bln each of both the on-the-run 5-year 4.10% Feb-29 BTP (ISIN: IT0005566408) and the on-the-run 10-year 4.20% Mar-34 BTP (ISIN: IT0005560948), although we note that there is a potential for either of these to be smaller if it is issued alongside another similar maturity bond. We don’t have a strong view on which CCTeu will be on offer, but we look for a size of E1.25-1.50bln depending on which issue(s) are on offer.
• Wednesday will also see Germany hold its last 10-year Bund auction of 2023 with E3.5bln of the 2.60% Aug-33 Bund (ISIN: DE000BU2Z015) on offer.

NET NOMINAL FLOWS: The week ahead sees redemptions of E19.7bln – E13.1bln of an Italian BTP Short-Term and E6.6bln of a Spanish Bono-i. Coupon payments for the week total E7.4bln: E2.6bln Spanish, E2.5bln French and E2.2bln Italian. This leaves net flows for the week at an estimated negative E11.5bln versus negative E5.2bln this week.