The Deutsche Finanzagentur...>

GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur re-opens its 2-year benchmark

0% Jun 2019 Schatz issue Tuesday for up to E4bln in size.

- BACKGROUND: Germany has sold E87bln in conventional bonds and E4.5bln in

linkers YTD - or around 62% of planned issuance target. This is the last

re-opening of this issue before a new Sep 2019 Schatz is launched on Aug 29. 

- RV: There is little concession seen in the June 2019 Schatz issue into the

auction, with yield at -0.685% - trading near richest level since mid-June.

Moreover, the continued steepening in German 2-/10-year yield spread also

implies little cheapening on the curve. That said, this Schatz is the CTD into

the Sep-17 future. 

- HISTORY: Schatz auctions are historically weak but the last re-opening on June

27 was strong where the DFA allotted E3.172bln at an average yield of -0.61% and

an impressive bid-to-cover ratio of 2.1 times. Prior to this, it was first sold

on May 22 for 3.965bln at an average yield of -0.65% and covered 1.2 times, i.e

technically uncovered - there have been 3 failed Schatz auctions this year. 

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