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SWEDEN: One Bid Accepted At Today’s 10-year Auction, But 5.56x Bid-to-Cover

SWEDEN

The National Debt Office only accepted one bid at today’s SEK2bln 10-year on-the-run 2.25% May-35 SGB 1066 auction (the full target amount was sold). The 100.678 accepted price was well above the 100.516 pre-auction mid-price, and the bond now trades near intraday highs of 100.681.

  • The 10-year SGB/Bund spread has tightened 1bp to -7bps following the auction.
  • The spread has widened from around -27bps since mid-September, following the latest dovish repricing in ECB rate cut expectations.
  • The 1066 line saw a bid-to-cover ratio of 5.56x, the highest since the bond was launched in January (see chart for all 8-12-year SGB bid-to-cover ratios since 2018).
  • Today’s SEK2bln 0.75% May-28 SGB 1060 auction also saw strong demand metrics, with 11 bids accepted.
  • On Monday, the National Debt Office reported a SEK29.4bln budget deficit for September, above the SEK12.7bln deficit forecast in May. However, this was mainly due to a SEK25bln Riksbank capital injection (the Debt Office had previously expected a SEK40bln injection to be paid in November).
  • The next borrowing report is due on November 28, which will need to take into account the smaller-than-expected Riksbank capital injection and the expansionary 2025 fiscal policies announced in the Government’s Autumn budget.

 

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The National Debt Office only accepted one bid at today’s SEK2bln 10-year on-the-run 2.25% May-35 SGB 1066 auction (the full target amount was sold). The 100.678 accepted price was well above the 100.516 pre-auction mid-price, and the bond now trades near intraday highs of 100.681.

  • The 10-year SGB/Bund spread has tightened 1bp to -7bps following the auction.
  • The spread has widened from around -27bps since mid-September, following the latest dovish repricing in ECB rate cut expectations.
  • The 1066 line saw a bid-to-cover ratio of 5.56x, the highest since the bond was launched in January (see chart for all 8-12-year SGB bid-to-cover ratios since 2018).
  • Today’s SEK2bln 0.75% May-28 SGB 1060 auction also saw strong demand metrics, with 11 bids accepted.
  • On Monday, the National Debt Office reported a SEK29.4bln budget deficit for September, above the SEK12.7bln deficit forecast in May. However, this was mainly due to a SEK25bln Riksbank capital injection (the Debt Office had previously expected a SEK40bln injection to be paid in November).
  • The next borrowing report is due on November 28, which will need to take into account the smaller-than-expected Riksbank capital injection and the expansionary 2025 fiscal policies announced in the Government’s Autumn budget.