The Deutsche Finanzagentur...>

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

0% Oct-22 Obl S176 for up to E3bln on Wednesday. 

- BACKGROUND: This is just the third outing for this Obl and the E3bln being

sold is fairly modest. There was around E1bln of German coupon payments paid on

Monday. 

- RV: The spread to the previous Obl benchmark, the Aug-22 is trading at its

peak today, making rolls quite attractive at just short of 10bp. This is close

to the best 3 month extension pick up on the curve. Indeed, the 2-5Y German

spread is steep compared to other AAA/AA EGB markets. However, the spread to the

Dec-17 Bund CTD, the Bund 1.75% Jul-22 is fairly non-descript. Spreads to

euribor and OIS curves have moderated from very expensive levels at end-Aug.

Currently, the Obl is 31.6bp through OIS compared to 35bp a week ago.

- HISTORY. Last month saw a yield of -0.26% and a Buba calculated cover of

1.03x, although bids were only E3.019bln vs E4bln on offer. 

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

0930GMT/1030BST