* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr (Updates auctions, provides context)

LONDON, Jan 5 (Reuters) – Robust demand for brand spanking new issuance by Germany, Italy and Eire on Tuesday confirmed buyers desperate to guess on expectations that European Central Financial institution bond-buying and the European Union’s restoration fund will prop up the euro zone bond market in 2021.

Germany offered round 4.8 billion euros ($5.90 billion) value of two-year Schatz.

The Italian treasury was set to promote 10 billion euros of a brand new 15-year bond through a syndicate of banks, at a fee of 8 foundation factors above the March 2036 BTP yield.

Orders had been value over 105 billion euros ($126.72 billion).

Eire was additionally seeing sturdy demand for a brand new 10-year bond, additionally being offered through banks, in response to one lead supervisor within the deal. It expects to boost 4 billion to five billion euros, up from an preliminary goal of three billion to 4 billion euros. Full particulars of the sale are anticipated afterward Tuesday.

Slovenia additionally launched two new worldwide points collectively value 2 billion euros ($2.45 billion), IFR monetary information service reported.

Bond analysts anticipate over 20 billion euros of provide this week in a month that’s usually a heavy for euro zone debt issuance.

“We now have the regular drumbeat of damaging COVID information and that’s one thing comparatively key to the ECB pledges to purchase bonds and to help the economic system,” mentioned ING senior charges strategist Antoine Bouvet, who expects peripheral bonds to do nicely this yr.

“Due to this fact from the viewpoint of buyers, that is an extra consolation blanket to go and snap up all of the bonds which might be being offered in January,” he mentioned.

New, tighter lockdown measures had been introduced for the UK on Monday. Italy determined to maintain nationwide restrictions in place and the lockdown in Germany is anticipated to be prolonged.

However a mixture of ECB bond-buying and the EU restoration fund, which is seen as limiting the financial fallout from COVID-19 within the hardest-hit European nations, corresponding to Italy, gave buyers an incentive to purchase euro zone authorities bonds.

“It’s about 80% the ECB and about 20% the EU restoration fund – it’s that form of a magnitude. The ECB shopping for is occurring now, the Euro restoration fund goes to start out making cost second half of this yr … it’s slower burning, I feel,” mentioned ING’s Bouvet.

Elsewhere, consideration was additionally centered on U.S. runoff elections in Georgia, which is able to decide the make-up of the Senate and thus President Joe Biden’s means to pursue his most well-liked insurance policies.

Analysts mentioned {that a} win for the Democrats might add to already-rising inflation expectations in the USA, widening the speed differential with the euro zone.

At 1511 GMT, Germany’s benchmark 10-year yield was at -0.589%, up a few foundation level on the day. Italy’s 10-year yield was flat at 0.526%.

Eire’s 10-year yield was additionally little modified at -0.321% and the unfold over Germany – which has proven little influence from Brexit developments in latest months – was a contact tighter .

($1 = 0.8141 euros)