Global Rates Strategy 2016

bonds issuance

UBS | In the euro Area €865bn of gross issuance is expected in 2016, €24bn less than 2015. We forecast the majority of countries to see a fall in issuance vs 2015. Issuance net of redemptions and coupons in 2016 is anticipated to be around +€56bn, slightly less than 2015. Net supply is non – supportive for bonds in 1Q16.

US: Lower nominal bond issuance in favour of T – bills

We project CY 2016 gross note and bond issuance to be $2083bn, $40bn lower vs. 2015. We expect 2 – 10y nominal auction sizes to be cut from May onwards. We forecast approximately $160bn of net T – bill issuance in 2016.

UK: £134bn of gilt issuance in FY16/17 vs. £127.4bn this year

UK gilt supply in 2016 is likely to be very similar to 2015. The DMO has already scheduled supply for the first quarter, which includes a linker syndication in February.

Australasia: Heaviest ACGB supply on record in 2016; minor pick – up in NZGBs

While gross supply of ACGBs should f all to A$80bn in the fiscal year starting in Jul – 16 (from $91b in FY15 – 16), lighter redemptions will result in a higher net supply figure of $60bn (vs. $52bn). Both gross ($86bn) and net supply ($67bn) in CY 2016 look set to be the heaviest on record. In New Zealand, our estimate for FY16 – 17 gross supply of N$9bn is an uptick of $1bn vs. FY15 – 16. Net supply should also increase, from $7bn to $9bn. This could result in slightly larger auction sizes in the second half of CY 2016.

Japan: Gross and net issuance expected to fall slightly in FY16/17

We expect ¥122tn of gross JGB supply (net supply ¥40tn) in the fiscal year starting in Apr-16. These figures represent reductions of ¥4tn vs. FY15 – 16. The months of Mar – 16, Jun – 16, Sep – 16 and Dec – 16 should be supportive from a net supply perspective.

Switzerland: CHF6bn of issuance is planned, but likely to be much lower

Although CHF6bn of issuance is planned for 2016 (almost double 2015 issuance), it should be noted that Switzerland tends to issue less than the initial target amount.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.