Highlights:

• Given the ECB’s Quantitative Tightening (QT), 2023 differs significantly from recent years in terms of the issuance volume to be taken down by the private sector. Since March, the ECB has only partially invested maturing bonds. We deem it likely that from July onwards, the ECB will hardly reinvest PSPP government bonds.
• Accordingly, EA net-net government bond issuance will rise to the highest level since the Great Financial Crisis in 2023. Aware of the tight technical situation, EA treasurers pushed ahead with issuing activity in Q1 and have already placed more than 30% of the scheduled annual volume.
• As in previous years, ESG bonds are also issued. Given the low volume, however, ESG bonds remain a niche product in the EA sovereign bond market.
• Given the partial withdrawal of the ECB, the technical situation will remain tense for the remainder of the year and into 2024, somewhat slowing the expected decline in yields over the next months.

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