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/PORTUGAL AUCTION PREVIEW. the Instituto...>

PORTUGAL
PORTUGAL: /PORTUGAL AUCTION PREVIEW. the Instituto de Gestao de Credito Publico
(IGCP) re-opens the PGB 2.25 Oct-22 OT and PGB 2.125% Oct-28 OT on Wednesday for
an indicative size of between E1.0bln-E1.25bln. 
- BACKGROUND: The 10Y Portuguese yield to Germany is at 137bp, close to its
lowest since 2010. There are 0.7bln of Portuguese coupon payments this week,
which might help the sale of the shorter 2022, in particular.
- RV/HISTORY: The spread compression to German has been astounding but the
momentum appears to have faded. The strong growth in Europe has lessened the
concerns about credit quality. The ECB buying in Portugal is now running close
to its capital key, mostly because the decline in the monthly pace from E60bln
to E30bln makes this possible. after a brief episode trading at a lower yield
than Italy, the 10Y Portuguese yield is now above the better-rated BTP yield. In
micro-RV terms, liquidity matters on the PGB curve and so the 2022 appears
expensive to peers.
- RESULTS: The auction bidding deadline is at 1030GMT and auction results are
announced around 15 minutes after that.

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