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The Deutsche Finanzagentur...>

GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur re-opens its 5-year Obl 0.00%
Oct-22 issue on Wednesday for up to E3bln in size. 
- BACKGROUND: There are no coupon or redemption payments to help this but the
market is abuzz with talk of ECB PSPP buying in the secondary market. 
- RV: Outright, the yield is -0.373%, just one basis point above the low since
June. Also unfortunately, the spread of the Obl Oct-22 to that of the CTD into
the Bobl contract, the Bund 1.75% Jul-22, has narrowed in the past two weeks.
The 2-5Y German spread is the flattest since mid-September and the spread
against the previous Obl benchmark, the Obl S-175 has also narrowed
substantially. German debt also looks expensive to the swap curve. Where value
does exist is against semi-core and peripheral markets as many spreads are close
to multi-month lows helped by nearly everybody suggesting carry trades given the
tame ECB outlook. Auction may be tough despite the smallish E3bln size. Six
month auction average bid-cover is 1.37x, yield was -0.36% at previous auction.
- RESULTS: Auction results are due around 1035GMT.

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