RATINGS: Portugal & France Present Most Interesting Scheduled Updates Tonight

This morning, Germany will hold its second 10-Bund auction of the year. On offer will be E4.5bln of the 2.50% Feb-35 Bund.

• The size is a step down from the E5.0bln seen at the last auction of this issue in January (when the Bund was launched); however, the size is consistent with recent Bund re-opens.
• Recent auctions in the German 10y segment have passed smoothly, with solid bid-to-covers (in a 1.83x to 2.40x range since July), bid-to-offers (1.52x to 1.93x range since July) and the low prices above the secondary market mid-prices throughout 2024.
• For the last 2.50% Feb-35 Bund auction on 8 January, the bid-to-cover stood at 2.12x, while the bid-to-offer came in at 1.60x.
• Bund positioning currently appears flat, and seems to have been characterized by a reduction of longs during the last week. See our Europe Positioning Indicator here: https://media.marketnews.com/MNI_PI_28012025_133af9ff97.pdf
• The political situation in Germany is characterized by some uncertainty at the moment amid snap elections being scheduled for February 23. However, the mainstream parties are expected to be able to form a functioning government as of now - so we don't expect an impact on today's Bund auction from that.
• The next German auction will be E5bln of the 2.40% Apr-30 Bobl (ISIN: DE000BU25042) on February 11, while the 2.50% Feb-35 Bund will be reopened next on February 19. Note that we also pencil in the possibility of a 30-year Bund auction next week.
• Timing: Results will be available shortly after the bidding window closes at 10:30GMT / 11:30CET.

• The DMO will return to the market this morning with GBP3.0bln of the 8-year 0.875% Jul-33 green gilt on offer.
• The GBP3.0bln nominal size is back in line with previous auction sizes after a GBP2.75bln auction in September.
• Tails for this green gilt have not been particularly tight in recent issuance with the last four auctions seeing 0.7-1.3bp tails (albeit that stratches back to September 2023 when the market was very different.
• Indeed, each of those four auctions saw the lowest accepted price below the prevailing market mid-price at the end of the auction window.
• Other conventional auctions more recently have been better received but there is the potential for another soft auction this week. Green issuance for the fiscal year will conclude next week with an auction of the 1.50% Jul-53 green gilt.
• Timing: Results will be available shortly after the bidding window closes at 10:00GMT. There is no PAOF available for green gilts.

ERM5 98.12/98.25 call spread sees another 22.5K lots blocked at 0.5, bought again, takes the total volume up to 52.5K lots on the day.