The DSTA will issue E4-6bln...>

DUTCH AUCTION PREVIEW: The DSTA will issue E4-6bln of a new DSL 0.75% Jul-28 on

Tuesday. 

- BACKGROUND. This is a DDA auction, there are no Dutch cash inflows to help but

there is E13bln of Schatz redeeming on Friday, although unlikely much help.

Issuance will be priced against the reference bond Bund 0.50% 15 February 2028.

- RV. The Dutch pension fund demand means that non-residents find little value

in the 15Y+ sector of the Dutch curve that tends to trade tight to the German

curve. At least at the 10Y tenor there is some good daylight between the Dutch

and German curves. Observing the 11.5bp spread between the Bund 0.5% Feb-28 and

Bund 0.25% Feb-28 being 11.5bp, the spread between the DSL 0.75% Jul-27 and

0.75% Jul-28 should be very similar. Indeed, early grey market indications are

in line with this spread. Dutch 10Y benchmark paper has narrowed to 15.3bp vs

the Bund 0.25% Feb-28 but this is part of a general tightening in Bund-EGB

spreads.

- TIMING. Direct Dutch auction begins Tuesday at 0900GMT. Settlement will be two

days after pricing. Often, these auctions go through quickly.