The Deutsche Finanzagentur...>

GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur re-opens its 5-year Bobl

0.00% Oct-22 issue on Wednesday for up to E3bln in size.

- BACKGROUND: There is a E16bln redemption of an old Obl on 13 Oct, the same day

as the value date for this auction. The US has both 3Y and 10Y auctions later in

the day and the DSTA issues a new Dutch 7Y this morning. This is going to be the

second last Bobl auction for 2017 with the final sale scheduled for Nov 8. 

- RV: The spread of the Obl Oct-22 looks generous when compared to that of the

CTD into the Bobl contract, the Bund 1.75% Jul-22 and also against the previous

Obl benchmark, the Obl S-175. Against the core and semi-core markets the German

5Y sector is trading close to six month averages. Against the swap curve, 5Y

Germany has cheapened slightly as talk of an ECB taper has gathered. However,

the cheapening of the Obl S176 to ASW-50.4bp is small (1-2bp since August) and

subject to considerable PSPP extension risk at the meeting in two weeks time. 

- RESULTS: Auction results are due around 0935GMT/1035BST.