/ PORTUGAL AUCTION PREVIEW: The...>

EUROZONE ISSUANCE: / PORTUGAL AUCTION PREVIEW: The Instituto de Gestao de

Credito Publico (IGCP) re-opens the 2.125% Oct-28 PGB and the 2.25% Apr-34 PGB

Wednesday, with expected issuance of E0.75-1.0bln.

- BACKGROUND: This will be the fifth tap of the 10-year benchmark Oct-28 since

it was launched in January, and the first tap of the 15-year Apr-34 since it was

first offered in April. Portugal has already sold 81% of planned 2018 issuance;

E1bln sold Wednesday would push that ratio up to 87%. 

- RV/HISTORY: The average yield of 1.919% for the 2028 at the last auction on

June 13 was arguably on the high side due to lingering political concerns in

Italy at that time. Since then yields have fallen for both the 2028 and the

2034, which was launched at 2.325% average yield. The 10-year tenor has made the

biggest gains on the PGB curve since June 13, dropping 18.9bps to 1.749%; the

15-year has rallied 16.7bps to 2.269%. 10-year spreads over Bunds at 145bps are

at the midpoint of the 132-161bps range they have traded in since early June so

while there is further room to rally, the 2028 is not obviously cheap.

- TIMING: Auction results are due shortly after bidding closes at 0930GMT.