The euro area issuance activity in most countries is more advanced at this stage of the year than in prior years.
Author: Florian Späte
–The euro area issuance activity in most countries is more advanced at this stage of the year than in prior years. Therewith, treasurers have exploited the benign funding situation, resulting in a muted supply over the rest of 2016.
– Lower fiscal deficits compared to 2015 are contributing to the friendly market environment in 2016. But, above all, the enlarged ECB’s QE program will ensure a negative net issuance in all euro area countries.
– Since an extension of the QE program until September 2017 is likely, the ECB will become an ever more important player on euro area bond markets. As net issuance is expected to shrink marginally to € 190bn in 2017, the ECB will hold more than 20% of all outstanding euro area government bonds by the end of next year.
– Notwithstanding negative side effects like higher volatility, the purchase program will remain a strong supporting factor for euro area bond markets next year. In this environment the upward potential for yields remains limited.
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The euro area issuance activity in most countries is more advanced at this stage of the year than in prior years.
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