Today, Germany sells E4bln...>

GERMAN AUCTION PREVIEW: Today, Germany sells E4bln of the 5Y bmk 0% Obl Apr-23. 

- BACKGROUND: This is only the second tranche of this Obl. Obl auctions have a

notoriously thin cover and the E4bln on offer just makes it more difficult to

achieve a technically covered auction. There is very little supply in EGBs this

week, although no coupons or redemption payments.

- RV/HISTORY: A yield above 0% is useful for bidding and the current secondary

market yield is 0.05%. Another positive for the auction is the spread between

the old benchmark (and CTD into the OEH8) the Oct-22 and the new, the Apr-23 is

11.4bp and at its highest since the new benchmark's first auction. No escaping

that almost all EGB spreads have tightened since lately and could make the

Germany 5Y appear cheap. On the negative side, German debt has become expensive

to the swap curve over the past 6 weeks although some was surrendered on

Tuesday. The 6 auction average Buba-calculated bid-cover ratio is 1.37x, or 1.1x

when the cover ratio is calculated more conventionally.

- RESULTS: Auction results are due shortly after bidding close at 1030GMT.