Euro area sovereign issuance off to a good start

In Short

As the Covid-19 pandemic is still lingering the budget situation remains tense in 2021. According to our calculations, euro area sovereign gross issuance will decrease only slightly compared to the last year (€1230 bn vs. €1265 bn). After the holiday break at the end of December, treasurers started the new year with momentum. This is a usual pattern as in the first quarter of the year up to one third of the scheduled annual issuance volume is issued.

Highlights:

  • Euro area sovereign issuance has started the year well. At the end of January treasurers have already placed around €130 bn of new bonds.
  • Noteworthy, particularly very long-dated bonds were issued. Almost half of the volume has a maturity of more than 10 years.
  • The ECB released also data regarding its QE purchases yesterday. According to this, the central bank reduced its buying compared to the previous months. This resulted in a positive sovereign bond net supply in January.
  • Considering the new data, we adjust the volume the ECB is forecast to absorb over the course of the year slightly downwards. Notwithstanding that, annual net supply will remain in negative territory.

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Euro area sovereign issuance off to a good start

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