The Deutsche Finanzagentur...>

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

benchmark 0.50% Feb-28 Bund for up to E2.0bln on Wednesday.

- BACKGROUND: This will be the sixth re-opening of the 0.50% Feb-28 this year.

MNI estimates Germany has completed 42% of its 2018 planned issuance of E147bln.

- RV: The auction comes amid a slightly more hawkish tone in EGB markets. Since

the last re-open of the Feb-18 on 18 Apr, the yield has backed up 10bps to

0.637%, and the 2s10s Bund spread has risen about the same to 119bps as the

short-end of the curve has remained relatively anchored. 10s30s are slightly

wider, by 1.6bps at 66.5bps, but off the May high of 68.2bps as 30s have

underperformed. French 10Y OATs are trading only 1.5bps wider since mid-April,

whereas Bunds have outperformed Italian BTPs by 11bps.

- HISTORY: The average bid-to-cover for the Feb-28 in the previous five 2018

auctions has been 1.07 and average yield of 0.60%, with the last re-open on 14

Apr covered 1.16 times and yielding 0.51%, with Buba retaining 18% of the sale.

Two of the five 10yr auctions in 2018 have been technically uncovered. 

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