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The Deutsche Finanzagentur...>

GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur sells a new 2-year benchmark
0% 13-Mar-20 Schatz issue on Tuesday for up to E5bln in size. 
- BACKGROUND: Value date for the auction is 22 Feb, one day before a E17bln
German redemption. So dealers may feel comfortable to bid on Tuesday in the
belief that buyers will arrive on Wednesday.
- RV/HISTORY: The is an Obl 0% Apr-20 that has almost exactly one month extra
maturity than the new Schatz and yields 7.3bp more than the existing 2Y Schatz
bmk, the 0% Dec-19. Three-quarters of 7.3bp is 5.5bp but we think that the small
Schatz would need to incorporate a small repo/bmk premium and so estimate a fair
yield roll from the previous Schatz as 5bp. Outright, German 2Y yields have
risen and ahead of the Italian elections, the sector might be seen as a
safe-haven. 2Y Schatz auctions are often technically uncovered, although this
time last year the Mar-19 was introduced to a 'massive' 1.5x cover (1.76 buba
calculated), following a rapid rise in yields in the prior month.
- TIMING: Auction results are due shortly after bidding closes at 1030GMT

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