EUROZONE ISSUANCE: EGB Supply - W/C 27 Jan (2/2)

• On Thursday, Italy will hold an auction to sell 5/10-year BTPs and a CCTeu. Details will be announced on Monday. We look for the on-the-run 5-year 3.00% Oct-29 BTP (ISIN: IT0005611055) to be on offer alongside 1-2 off-the-run BTPs in the 10-year area. We don’t have a strong conviction surrounding the CCTeu that will be on offer.
• We pencil in a German 30-year Bund syndication on Tuesday. We expect a similar size to last year (E6bln with E1bln retained). This avoids the Fed / ECB decision days and keeps it in January ahead of the next round of inflation data. Furthermore, a transaction in the upcoming week would be before any US tariffs start while there's also been huge demand at other recent Eurozone syndications so there is incentive to get a syndication completed now as it should be cost effective with a tight spread to benchmark/swaps. There is also a gap in the auction calendar in the following week (W/C 3 February) – however, this coincides with the Winter holidays in some regions, so we still favour the upcoming week. 

NOMINAL FLOWS: The upcoming week sees E21.8bln of redemptions of which E21.3bln are from a formerly 5-year Spanish Bono and E0.4bln are from a LATVGB. Coupon payments for the week total E4.1bln of which E2.6bln are Spanish, E1.0bln are Greek, E0.3bln are Italian and E0.2bln are Austrian. This leaves estimated net flows for the week at positive E15.5bln, vs positive E56.5bln this week.

For more on last week's issuance and a look ahead to next week see the MNI EGB Issuance, Redemption and Cash Flow Matrix here.