SPAIN AUCTION RESULTS: Decent Set Of Bono/Obli Results

• Spread set 4.25% Sep-39 gilt +4.00bp (Guidance was +4.00/+4.25bps)
• Size: GBP Benchmark (MNI expect GBP5.0-6.5bln)
• Books in excess of GBP115bln (inc JLN interest of GBP7bln)
• Expected Settlement Date: 22-January-2025 (T+1)
• ISIN: GB00BQC82D08
• Joint Leads: DB (B&D / DM) / JPM / MS / Nomura / RBC CM
• Timing: Books to close at 10:00GMT, today’s business

From market source

SX5E (20th Jun) 5100/4900ps, sold at 65.1 in 3k.

Citi are “bullish periphery and expect BTPs to eventually converge with OATs but would avoid BTPs in the near-term due to the risk of excessive volatility (linked to Trump tariffs).”

• Instead, they prefer “Bonos to express our structural longs – 30s vs OATs and 20s vs OLOs.”
• “The Bono-OLO spread has already started to move as it benefits from the anticipation of front-loading of OLO supply.”
• However, they caution that subsequent “performance might be slow given positioning, higher than expected Bono supply for 2025, concerns around the Spanish budget following Puigdemont withdrawing support for the Sanchez government and the spending needed for flood relief.”
• Still, their base case remains, as they look for “continued strong growth/low deficit in Spain, with a key near-term hurdle perhaps the supply pressure ahead.”