Bloomberg News

Europe’s Debt Sales Will Be Supported by Cash Inflows, UBS Says

December 12, 2011

Dec. 12 (Bloomberg) -- Debt sales by euro-area governments such as Italy, Germany, and Spain this week are likely to be underpinned by 18 billion euros ($23.9 billion) of cash from redemptions and coupon payments, according to UBS AG.

The governments are forecast to issue 12 billion euros ($15.9 billion) of bonds over the next four days, Gianluca Ziglio, an analyst at the Swiss bank, wrote in a note to clients on Dec. 9. Germany plans to raise 5 billion euros from selling two-year notes on Dec. 14, and Italy will auction up to 3 billion euros of five-year debt the same day. Spain is scheduled to sell bonds maturing 2016, 2020, and 2021 Dec. 15.

“This weekly supply will therefore be skewed towards short and intermediate maturities, with hefty cash flows likely to support the large two-year supply from Germany,” Ziglio wrote. “This will be the last week of heavy bond issuance in the euro zone before the holiday season since only Italy will be left selling bonds in the remainder of the month.”

Countries that have met their borrowing targets for this year include France, the Netherlands, Belgium, Austria, Finland and Portugal, according to UBS. Germany raised 97 percent of its requirement for the year to date, Italy met 96 percent of target, and Spain 94 percent, the bank said.

--Editors: Nicholas Reynolds, Matthew Brown

To contact the reporters on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net

To contact the editors responsible for this story: Daniel Tilles at dtilles@bloomberg.net;


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