* Triple-A issuers to dominate
* Germany to launch new 2-year issue, zero coupon seen
* Italy in market with three-year sale
By Kirsten Donovan
LONDON, Nov 9 The euro zone's lowest risk
issuers are set to find good demand at bond auctions next week,
with renewed jitters over Greece and global economic growth
bringing investors flocking back to the safe-haven paper.
Next week's issuance - with sales from triple-A rated
Germany, France, The Netherlands, and also Italy - will total
around 23 billion euros, hitting the market in a week all but
devoid of coupon and redemption cash inflow payments.
Of most interest will be Germany's launch of a new two-year
bond, maturing in December 2014, which analysts expect to be the
third such to offer investors no return on their cash.
"With front-end yields back in negative territory, it looks
like it will be another zero percent coupon," said Commerzbank
rate strategist Michael Leister.
Two-year German bond yields dropped below zero again this
week with no clarity on when Greece would receive
more aid, signs the economic rot in the euro zone was
increasingly spreading to the region's powerhouse and the
prospect of growth-crushing spending cuts in the United States.
"We are in an environment that is supportive for core
bonds," said ING rate strategist Alessandro Giansanti
"We expect lower (demand for the new bond) compared with the
previous auction but we do expect it to be covered," he added,
referring to attracting more bids than the 5 billion euros on
Italy will sell three-year bonds on Wednesday, with some
analysts expecting the launch of a new benchmark and possibly
also a foray into the longer-end of the curve after Spain
successfully sold 20-year debt this week.
Italy has not sold bonds with a maturity of more than 15
years since the first half of 2011. It will announce details of
the auction later on Friday.
"With the risk-off tone and yields spiking higher, it will
be interesting to see how this auction does," Commerzbank's
"Nonetheless...we believe it should be absorbed fairly well
given the over-riding theme remains unchanged and the periphery
remains supported. If we see some further (cheapening), that
should attract buying interest."
Recent central bank data has shown signs that international
investors - who fled the market earlier this year - have
tentatively resumed buying both Italian and Spanish bonds.
But peripheral yields have crept higher again this week as
concerns about the sustainability of Greece's debt load bubbled
back to the surface and with little prospect of Spain asking for
a bailout this year - something that would allow the European
Central Bank to buy its bonds - after it reached its 2012
A senior EU official said on Friday that euro zone finance
ministers were unlikely to take a final decision to release the
next tranche of emergency loans to Athens - cash necessary for
Greece to avoid bankruptcy - at a meeting on Monday