The Deutsche Finanzagentur...>

GERMAN AUCTION PREVIEW: The Deutsche Finanzagentur re-opens its 10-year

benchmark 0.50% Feb 2028 Bund for up to E3bln on Wednesday.

- BACKGROUND: This will be the fifth re-opening of the 0.50% Feb 2028 Bund this

year, and could be supported by the E15bln redemption due this week.

- RV: The yield curve has lower yields (currently 0.514% compared to 0.60% last

time) and is flatter than it was when this bond was last sold. There has been

very little concession in the week running up to today's auction. The natural

hedge for this auction is the Bund future and the spread to the CTD into the

Jun-18 contract (Bund 0.25% Feb-27) doesn't look too bad compared to history at

12.4bp. The Feb-28 has cheapened to swaps in last 2-3 weeks but remains

expensive.

- HISTORY: The Feb 2028 Bund was last re-opened back on Mar 21 where E2.446ln

was sold at average yield 0.60% and bid-to-cover ratio of 1.04 times, with Buba

retaining 18.5% of the sale. 4 of the last 6 10-yr auctions have come in

technically uncovered with an average cover ratio of 1.011 times.

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