Recent peripheral auction support, will it continue?

This week will see roughly 22bn being raised, this makes it a very busy week in terms of auctions. Often the market focuses on the supply and overlooks the maturing issues and coupon payments. For example today Italy has had one of the largest maturities of the year. It will return about 26bn to investors. In addition, coupon payments from Italy and Spain will give investors another 16bn. I think that some of these funds freed up in the maturing issue and made available by the coupon payments have been used to buy new issues. Especially with the ‘risk on’ appetite dominating the market, I think the next few peripheral auctions will be supported. However, it is worth noting that February could be different as although the issuance is around the same amount as Jan (about 80bn) the amount of redemptions and coupon payments is considerably less covering about half of the projected issuance.