New benchmark launch to burden Finnish bonds in the near term

In addition to the grim Finland's economic outlook, the supply outlook is against Finnish bonds in the near future. Finnish bonds have already seen some underperformance during the summer. In many maturities, Finnish bonds currently offer pick-up vs Austrian bonds.

A new 10-year benchmark will be launched during the second half of the year, likely sooner rather than later and possibly already in the coming weeks. The announcement of a new benchmark usually leads to a small widening in Finnish spreads, and this is to be expected this time as well.

"The new 10-year bond is likely to offer pick-up over the existing Finnish curve. As a result, buying Finnish bonds ahead of supply announcement does not look attractive. The new bond should offer a much more attractive entry point, as Finnish bonds tend to perform a bit after the launch of a new bond", says Nordea Bank.