By Emese Bartha
France and Spain could be unusually busy in government bond
issuance in August, traditionally the month with the lowest bond
sales volume in the eurozone.
The French Treasury Agency said earlier Friday that it will
auction government bonds on Aug. 6, bucking market expectations it
would cancel that operation, as in previous years.
Spain has also been expected to cancel a bond auction scheduled
for Aug. 20, but it may surprise by going ahead.
In previous years, Spain went ahead with only the first of two
scheduled bond auctions in August, and at the same time cancelled
the second operation, usually conducted on the third Thursday of
the month.
Earlier Friday, the Spanish Treasury announced which bonds it
will auction on Aug. 6 but didn't mention the Aug. 20 auction,
raising expectations in the market that it will proceed, unlike in
the past several years.
Both France and Spain schedule their auction dates a year in
advance.
"Spain is rumored to hold the auction scheduled on Aug. 20, a
factor which might continue to weigh on Spanish bonds and fuel
further underperformance of Spain versus Italy in August," said
Chiara Cremonesi, a rates strategist at UniCredit.
Prior to the French agency's announcement, Peter Chatwell,
senior rates strategist at Mizuho, said it was understandable if
the agency issued bonds next week to take advantage of current
market levels, and the conditions created by the European Central
Bank's public sector purchase program. Still it would be a
surprise, he had said.
Other analysts had thought it very likely that France would skip
the auction on Aug. 6.
France will auction 4.5 billion euros to 5.5 billion euros
($4.93 billion to $6.02 billion)of October 2023-, October 2025-,
October 2032- and April 2060-dated bonds on Aug. 6.
Spain will reopen 2018-, July 2020- and July 2025-dated bonds on
the same day, for a target volume to be announced Monday.
Write to Emese Bartha at emese.bartha@wsj.com