Spain taps E3.0-E4.0bln of....>

SPAIN AUCTION PREVIEW: Spain taps E3.0-E4.0bln of SPGB 0.05% Jan-21, SPGB 1.45%

Oct-27 and SPGB 5.75% Jul-32 on Thursday.

- BACKGROUND: On the political front the Catalan elections are due to be held 21

Dec. This may add to the concerns that maybe be existing in the market at this

point. Italian debt is also weak. On the positive side there are usually French

OATs being auctioned, but are absent on Thursday. 

- RV/HISTORY: The spread BTP 0.2% Oct-20 vs SPGB 0.05% Jan-21 shows 3.8bp

advantage for Spain, following a strong Italian outperformance. More

importantly, is that the 2-3Y area of Spain has steepened; see SPGB 0.25% Jan-19

vs SPGB 0.05 Jan-21. The steepness of the Spanish curve extends also further up

and the spread between the CTD into the Mar-18 Spanish bond future (1.3% Oct-26)

and the SPGB 1.45% Oct-27 is at its highest since September. 

- The average 6 auction averages for 1-4Y bonds, like the Jan-21 is 2.5x, for

10Y bonds is 1.8x and for 10Y+ bonds is 1.5x. 

- RESULTS: Auction bidding closes at 0930GMT with results around 0940GMT