MNI EGB Issuance, Redemption and Cash Flow Matrix - W/C Feb 5

• Slovakia, the EU, the Netherlands, Austria, Germany and Finland are all scheduled to hold auctions issue in the week ahead.
• We also pencil in syndications from the EFSF (mandate announced), Belgium and Spain.
• We pencil in estimated gross issuance for the week at E32.4bln, down from E58.6bln this week.
• The week ahead sees no redemptions and coupons of just E0.4bln.
• This leaves estimated net flows for the week at positive E32.4bln, up from positive E16.9bln this week.

For more see the full including an overview of the next 2 weeks of issuance, a recap of this week's issuance and tables showing cash flows over the upcoming weeks, see the PDF here:

EZ240205.pdf

Supply Next Week

• The EFSF has sent an RfP ahead of an expected “upcoming” transaction. EFSF syndications have tended to take place on Mondays (and occasionally Wednesday) so we tentatively pencil in Monday as the most likely date for now.
  • We are unsure of which bonds will be on offer and the size of the transaction (including whether it will be a single or dual-tranche transaction).
  • The EFSF has already raised E7bln via its 8 January dual-tranche 5/15-year transaction which will have completely covered the 17 January redemption of E4bln and the majority of a 19 February redemption of E4bln. The next redemption is not until 19 April (for E5.5bln).
  • With little in the way of repayments due to the EFSF in 2024, the vast majority of these redemptions will need to be rolled over. There is therefore a risk that the EFSF decides to lock in the favourable funding conditions seen by the huge primary demand at present and holds another dual-tranche syndication to front load its 2024 issuance.
  • We had originally pencilled in an ESM transaction for this week, but we now expect that to be pushed later into the quarter.
• Slovakia will hold a special auction held on Monday to launch new 2/4-year SlovGBs. On offer will be the 2-year 3.00% Feb-26 SlovGB (ISIN: SK4000024675) with an eventual issue size of E1.5bln and the 4-year 3.00% Feb-28 SlovGB (ISIN: SK4000024683) with an eventual issue size of E3.0bln. Note there will be no non-competitive round.
  • Slovakia's 2024 funding plan included plans to launch a new 4-7 year SlovGB this year. We had noted in the MNI Eurozone Issuance Deep Dive that with only one SlovGB with a maturity of less than 8 years available for tapping (the 0.125% Jun-27 SlovGB - ISIN: SK4000017380)) that we may see an earlier launch of the 4-7 year SlovGB than the usual first syndication of the year. However, we had not expected to see a dual-tranche special auction – rather expecting a launch via an early syndication. Note that at the 15 January auction there was huge demand with E1.27bln sold across the four SlovGBs on offer.
• The EU will look to hold an auction on Monday with up to E3bln of the short 3-year 2.75% Oct-26 EU-bond (ISIN: EU000A3K4D82) and up to E2bln of the 20-year 4.00% Apr-44 EU-bond (ISIN: EU000A3K4EL9) on offer.
  • The last EU-bond auction on 8 January (with 5/10-year EU-bonds on offer) was poorly received. However, the syndicated 7/30-year taps on 23 January saw huge demand with the second highest ever book for an EU-bond syndication (only exceeded by the inaugural EU-SURE launch).
• The Netherlands will look to come to the market on Tuesday to hold a DDA to launch E4.0-6.0bln of the new 10-year 2.50% Jul-34 DSL (ISIN: NL0015001XZ6). The initial spread guidance will be communicated on Monday. We expect the top of the target range (E6.0bln) to be sold.
• Also on Tuesday, Austria will look to hold an RAGB auction with E2.013bln of on the-run 5/10-year RAGBs on offer: the 0% Oct-28 RAGB (ISIN: AT0000A2VB47) and the 2.90% Feb-34 RAGB (ISIN: AT0000A39UW5)
• On Wednesday, Germany will come to the market with E3bln of the 7-year 2.40% Nov-30 Bund (ISIN: DE000BU27006) on offer.
• Finland will conclude the week’s scheduled issuance with up to E0.4bln available for 1-2 RFGBs through the ORI Facility.
• Possible syndications:
  • Belgium: We pencil in a second Belgian syndication of 2024 during the week (although we do flag the possibility that it could be pushed back to the following week given the heavier redemption schedule of the following week). The most likely new issue in our view is probably a new 30-year OLO. The BDA has also noted that it plans for one new medium-term OLO to be launched in the year which could potentially be launched in this window rather than the 30-year OLO. We see an Oct-30 OLO as the most likely maturity (potentially Oct-29). There is a current coupon gap in the OLO curve around this area.
  • Spain: We also expect another syndication from Spain in February – most likely a new 30-year Oct-54 Obli for E5-7bln. This also has the potential for a possible launch in the week ahead. The lack of any nominal bonds with a maturity longer than 10-years at the 1 February auction makes us more confident a syndication is imminent.