HALISTER1: AUCTION PREVIEW: 10Y OLO Offers Value, Mixed View on Longer Debt

AUCTION PREVIEW: 10Y OLO Offers Value, Mixed View on Longer Debt

(Bloomberg) -- Belgium to sell 1% 06/2026, 1% 06/2031, 1.9% 06/2038 and 1.6% 06/2047 for total EU2.8b-EU3.5b at 11:30am CET. 10Y sector has seen some concession, though picture mixed for longer-dated bonds, analysts say.
  • JPMorgan (Gianluca Salford)
    • 10Y looks cheap, offers annualized benchmark roll of 5bps, second highest among core countries; cross-market, see 9Y-10Y OATs cheap vs France
    • 06/2031, 06/2038 issues both trade around fair value; 06/2047 looks cheap, with this being the first tap since original syndication, offers value vs off-the-run 06/2045
  • UniCredit (Elia Lattuga)
    • 10Y is at cheap end of YTD range on 03/2026-06/2026-03/2028 barbell
    • 06/2031 issue has cheapened slightly, now trades flat in z-spread vs longer-dated 03/2032
    • Favor owning the longer-dated bonds on the wings of 06/2038-03/2041-06/2047 barbell, recent cheapening trend to continue given relative richness on the curve
  • SocGen (Marc-Henri Thoumin)
    • 10Y has underperformed peers in ASW; sector has also seen general cheapening against shorter-dated maturities, such as 2022/2026 OLO spread, which may help demand
    • All longer-dated issues have seen no particular pre- auction cheapening; 15Y, 20Y and 30Y sectors all look rich relative to the curve, expect moderate interest overall
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Gianluca Salford (JPMorgan Chase & Co)
Elia Lattuga (UniCredit SpA)
Marc-Henri Thoumin (Societe Generale SA)

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