For the Euro-8 sovereign issuers under our scope + EU NGEU, we expect a slight increase in both net and gross issuance in FY25 vs. FY24 (by c.EUR10-15bn). As was the case in FY24 vs. FY23, the issuance targets, combined with the additional net supply derived from the ECB’s debt portfolio roll-off and the expected reduction in support coming from retail investors, will be conducive to a scaling up of the net recourse to capital markets to c.EUR645bn by the main four issuers (c.EUR791bn if we add the NGEU issuance), from the EUR570bn registered in FY24 (c.EUR710bn including NGEU funding).
Spain: The funding strategy outlines a target for gross medium- and long-term bond issuance of c.EUR177bn (c.EUR170bn in FY24): this would cover bond amortisations of EUR114bn and leave net bond issuance at c.EUR61.8bn (c.EUR56.4bn in FY24). The risk of deviation in these figures is balanced and we do not expect any significant deviation. We expect c.20-22% of total gross bond issuance to be covered through syndications (c.EUR35-38bn), most likely through two new 10Y references and new 15Y and 20Y benchmarks. In terms of timing, we expect the net supply pressure to be concentrated in January, March, June and October.
Italy: we expect gross bond issuance this year of EUR344bn and net issuance of EUR105bn (vs. EUR364bn and EUR99bn, respectively, in FY24), with an average maturity of issued debt (in the m-l term tenors) to be c.8.3 years (excluding the NGEU loans), contributing to an extension of the average duration of the outstanding debt. We estimate the total amount of syndications at EUR89bn. In line with recent years, we expect the Italian Treasury to execute at least EUR15bn of ALM operations (given the current debt profile, the buyback leg will probably be focused mainly on the 2026 tenors, while in 1Q25 there might be room for pure pre-funding ALM operations on bonds maturing in 2H25).
Portugal: we expect gross bond issuance to be c.EUR21bn (EUR15bn in FY24), whereas net bond issuance may stabilise at EUR6.9bn (substantially in line with EUR6.7bn in FY24). Portugal has already executed a new 10Y syndicated deal, and we believe the next two syndications will be on new 15Y and 20Y benchmarks, for a total volume to be raised through these operations of c.EUR10bn (c.50% of the gross issuance amount expected in FY25).