The Deutsche Finanzagentur...>

GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur sells its 30-year benchmark

Bund 1.25% Aug-48 for up to E1.5bln on Wednesday. 

- BACKGROUND: The size is slightly as big as 30Y auctions get to. There is a

Schatz redemption that coincides with settlement but the duration mis-match may

be too high to help a 30Y auction. 

- RV: There are a couple of natural leap-off points into this auction, the

EuroBuxl contract and the 10Y Bund. The CTD into the contract is the Bund 3.25%

2042 and the spread of today's 2048 is 10.7bp, which is well down from level of

early January. Additionally, the 10-30Y spread narrowed aggressively in January

but stabilised in February and early March and is 65.8bp today. As always, 30Y

Dutch paper looks expensive against 30Y Germany as a result of a heavy pension

fund presence in the Dutch market. HISTORY. German 30Y auctions are usually well

covered. The past six auctions have averaged a Buba-calculated 1.61x and a

bid/for sale calculation of 1.32x. The previous auction yield was 1.33%. 

- RESULTS: Auction results are due shortly after bidding closes at 0930GMT