Bonds News

Euro zone bonds hold ground as focus turns to issuance

* Austria, Greece, Slovenia to sell bonds via syndication

* Bonds subdued after Italy rally on Monday, Tuesday

* Focus on U.S. Federal Reserve

AMSTERDAM, Jan 27 (Reuters) - Euro zone bond yields held ground on Wednesday as focus turned to a flurry of government bond sales in the bloc.

Austria and Greece launched sales of new 10-year bonds, and Slovenia is selling a new 60-year bond, all three via syndication, according to lead manager memos seen by Reuters and a bourse filing.

In syndications, investment banks sell bonds directly to end investors, allowing borrowers to issue larger amounts and reach a wider investor base.

They join larger governments like Italy, Spain and France who sold bonds via syndication earlier this month as part of the usual January cycle, most of which received record demand as investors bet that European rates will stay lower for longer.

“Given the recent appetite for bonds, also seen with yesterday’s EU SURE supply that saw strong investor demand, we expect another strong interest in the bonds on sale today,” Piet Haines Christiansen, chief analyst at Danske Bank, told clients.

The European Union received combined demand of 132 billion euros for the sale of a new seven-year bond and the reopening of a 30-year bond on Tuesday, over nine times the 14 billion euros raised.

Elsewhere, Germany is scheduled to reopen a 10-year bond via auction.

Its 10-year yield, the benchmark for the region, was unchanged at -0.53% at 0843 GMT.

“We expect to see some relative stability during the session ahead, without too many catalysts on the schedule,” Mizuho analysts told clients, adding that the bond sales should not put pressure on the market given they are rare events.

Italy’s 10-year yield was also unchanged at 0.61% after dropping 9 basis points during the previous two sessions, on hopes that Prime Minister Giuseppe Conte’s resignation could help form a new government in Rome.

The closely watched gap with Germany’s 10-year yield - effectively the risk premium on Italian debt - was at 114 basis points, off its highest since November around 123 basis points touched last week when markets worried a snap election might result from political turmoil.

“BTPs (Italian bonds) may have less of a strong day ahead, simply given yesterday’s decent performance (after PM Conte resigned), but we look for further peripheral tightening to come,” Mizuho analysts said.

Focus also turns to the U.S. Federal Reserve meeting later on Wednesday, where Chairman Jerome Powell will likely reiterate that it is too early to discuss tapering the bank’s asset purchases. (Reporting by Yoruk Bahceli; Editing by Andrew Cawthorne)