Exclusive: Austria Debt Head Stix: Could Tap Market for 2120 Bond This Year if We See Demand

26 September 2024

By Marta Vilar – VIENNA (Econostream) – Demand for ultra-long bonds will recover and Austria will then assess the possibility of tapping the market for this ‘opportunistic’ part of the curve, according to Markus Stix, Managing Director in charge of markets at the Austrian Treasury.

In an interview with Econostream on 19 September (transcript here), Stix said that demand for ultra-long bonds would ‘definitely’ come back.

Austria dropped its plans for a syndicated sale of the 2086 bond in late August. ‘There was not enough demand for the tap of this bond in the syndicate format’, he explained.

The Austrian Treasury then sold €741 million of this bond via the auction system, which made clear how important it is that there are more issuing techniques, he stated.

The ultra-long segment was an ‘opportunistic’ part of the curve, according to Stix, and Austria could tap the market for long dated instruments like its 2120 bond this year ‘if the market is in our favour and we see demand’.

‘But it's more opportunistic and not driven by a clear issuing plan that we can go and say, “Yes, we will go on the next auction date with the 2120.” It’s not possible to have this in the issuing calendar already decided in advance’, he said.

As for issuing techniques, Austria had three possibilities on the table and ‘will continue doing all three options’, he said: syndicate format, tapping via auction or tapping bilaterally based on reverse inquiries from investors.

Bundesschatz, Austrian Treasury’s new online retail savings product launched in April, had had a ‘very positive market reaction and the product developed very well’, he said.

Asked about a potential new innovative product, Stix said that the Treasury had ‘one or two new ideas, but it is too early to announce it at the moment’.

It was also too early to say whether the 2025 issuance plan for green bonds would increase from this year’s €6.2 billion, he said.

‘[W]e would have to wait for the 2025 budget to evaluate this. Due to the elections taking place at the end of September and the following formation of a new government the new budget forecast will take a bit longer. In the meantime, the 2024 budget figures are being perpetuated’, he said.

Credit rating agency S&P Global Ratings’ upward revision of Austria’s outlook to positive from stable was ‘very good news’, he said.

‘If you read the normal signals of a positive outlook, there is a higher probability that the rating is improved in the next 12 to 18 months. But let's see’, he said.