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SWEDEN: Another Weak On-the-run 10-year Auction

SWEDEN

Today’s auction of the on-the-run 10-year SGB (2.25% May-35 1066 line) saw a third consecutive weak bid-to-cover ratio. This will keep concerns about how much supply the market can absorb at the fore, and may factor into the Riksbank’s QT deliberations in the remainder of this year.

  • This was the first auction after the Swedish Finance Ministry announced “around SEK60bln” of unfunded fiscal measures for 2025. The National Debt Office (NDO) had accounted for SEK40bln of stimulus in its May 2024 forecast round. Analysts expect further 2025 stimulus to be announced early next year too.
  • Given the recent weakness in 10-year bid-to-cover ratios, the NDO may elect to cover additional issuance needs with a larger number of auctions, rather than by increasing auction sizes again (nominal bond auction sizes have already been increased to SEK4bln as of August this year).
  • It will be important to track the performance of auctions over the next few weeks, particularly as market participants return from their summer holidays (since low summer demand may have exacerbated weakness at recent auctions).
  • Today’s 1066 SGB auction saw a 1.12x bid-to-cover ratio for the SEK3bln issued, with the 1066’s yield now trading 1bp above pre-auction levels. The 10-year SGB/Bund spread thus trades over 3bps wider today at -22.4bps.
  • The other SGB on offer today (the 2.25% Jun-32 SGB 1056 line) saw better demand metrics, with a 2.3x bid-to-cover ratio for the SEK1bln issued.
CEEMEASwedenBulletGlobalFixed Income BulletsRegionMarkets
CEEMEASwedenBulletGlobalFixed Income BulletsRegionMarkets

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