Government bond sales in the euro region will increase by 1 billion euros ($1.27 billion) to a gross 990 billion euros in 2011 as increased redemptions outweigh improved government finances, ING Groep NV said.
While net issuance will slip to 408 billion euros from 468 billion euros this year, redemption payments will rise to 582 billion euros from 521 billion euros, Padhraic Garvey, head of developed markets debt strategy at ING in Amsterdam, wrote in an e-mailed note today. That will cancel the benefit of an 85- billion euro decline in deficits, he said.
The 2011 issuance “will feel just as heavy as in 2010,” Garvey said. “The good news from a supply perspective is that lower fiscal deficits take pressure off 2011 issuance requirements. The bad news is redemption payments are higher in 2011.”
Governments in the euro region will sell 636 billion euros of bills, or securities that mature within one year, in 2011, he wrote.
While Greece will issue 60 billion euros of bonds, “it is highly unlikely that this will be funded on capital markets, as the European Union/International Monetary Fund program will continue to be drawn upon to fund the Greek exchequer,” Garvey wrote.