On Wednesday, Germany........>

GERMAN AUCTION PREVIEW: On Wednesday, Germany sells E4bln of the new 5Y bmk 0%

Obl Apr-23.

- BACKGROUND: Obl auctions have a notoriously thin cover. Only twice in the past

ten auctions has the bidding total been higher than E4bln i.e. above Wednesday's

total. Hopefully, the higher yields and underperformance of the belly vs the

wings and swaps can help. 

- RV/HISTORY: MNI sees a fair value spread to the Obl 0% Oct-22 of closer to 9bp

than the 8.2bp in the grey market Perhaps the positive yield of the April-23 in

the grey market is helping. Also, outright 5Y Obl yields have gone up

significantly lately and the 5Y has underperformed on the 2-5-10Y fly. Existing

Bobl rolls from Oct-21 to Apr-22 is 9.4bp, from Apr-22 to Oct-22 is 9.9bp. We

also looked at the Obl swap spread curve and believe that the new Obl should

come cheaper than the current Obl 0% Oct-22 of ASW-42.6bp, although the grey

market ASW for the new Obl is around 0.8bp more expensive, likely reflecting a

repo scarcity issue.

- RESULTS: Auction results are due shortly after bidding close at 1030GMT.