The Deutsche Finanzagentur...>

GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur auctions its 5-year benchmark

0% Oct-22 Obl S176 for up to E4bln on Wednesday.

- BACKGROUND: This is just the second outing for this Obl. The 5Y auctions have

been heavily afflicted from low bidding but all of the German cover ratios have

improved lately. A bigger problem is a seasonal vacation one.

- RV: Yields on 5Y German paper have been declining for over a month and the

yield is -0.24% compared to -0.14% at the auction in early July. The 5Y Obls

have also outperformed swaps by a couple of basis points since in the past

month. The 2-5Y curve has flattened an will limit small extensions. With North

Korean events and some strange movements in the HK$ today, the German market

should be the safe-haven in the storm.

- HISTORY. Last month saw a yield of -0.14% and a Buba calculated cover of 1.4x,

although a proper cover ratio was 1.13x.

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

0930GMT/1030BST