(Bloomberg) -- Euro-area bond markets will face a wave of issuance from the region’s top four borrowers next week, even as investor anxiety simmers over an expected tsunami of supply this year to fund massive stimulus plans.
Germany, France, Spain and Italy are scheduled to auction debt totaling 25 billion euros ($28 billion) during March 30-April 3, according to an estimate by strategists at Commerzbank AG. The U.K. will offer a combined 5 billion pounds ($6.2 billion) of 2028 and 2041 gilts next week. The Italian Treasury is due to pay 15 billion euros in redemptions and another 500 million euros in coupons.
The auctions come as investors estimate expected borrowings that would fund more than 200 billion euros of fiscal spending announced by Germany, France, Italy and Spain to combat the economic shock from the coronavirus. Still, soothing concerns about a supply surge is the European Central Bank’s new 750-billion-euro emergency debt-buying program that started this week.
The ECB is also supporting the financial system by pumping in cash through special money-market transactions. Its weekly and three-monthly operations have boosted excess liquidity -- a measure of money available in the system over and above banks’ needs -- by the most since July 2018 toward a record.
The central bank’s purchases and liquidity injections helped drive euro-area bond yields down this week, with those on benchmark French debt on course for the biggest weekly drop in four years. The rally was also fueled by money-market expectations that the institution could lower its policy rate by a further five basis points by year-end.
Inflation trends have somewhat been overshadowed by the ECB bond program with consumer-price expectations -- as measured by five-year forward, five-year inflation swaps -- rising almost 30 basis points from this week’s record low of 0.67%. Still, the euro-area’s flash estimate for March may garner some attention on Tuesday.
Alongside Germany and U.K., the bloc will publish final manufacturing PMI figures on Wednesday and final service numbers on Friday.
- Germany will also release state and national inflation data on Monday as well as February retail sales numbers on Wednesday.
- Aside from the PMI data, the U.K. will also publish construction numbers for February on Tuesday
- S&P Global Ratings reviews Germany and France, Fitch Ratings reviews Belgium and DBRS Ltd. reviews European Union’s rating next Friday
- ECB’s Robert Holzmann is the only scheduled central-bank speaker when he presents the institution’s anual report on Tuesday in Vienna
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