Halister News

(Bloomberg) -- France to sell 0% 02/2019s, 0.25% 11/2020s for EU6.5b-EU7.5b at 10:50am CET, then sell I/L bonds for EU0.5b-EU1b at 11:50am CET. Analysts suggest the reduced size of auction may support the sale with demand expected vs Belgium, Germany.

• Mizuho (Antoine Bouvet)
  • Size is ~EU1b less than average of past four short-end auctions and lower average maturity should help garner decent demand
  • Lack of competition from short-dated supply out of Belgium, Germany is also supportive

• Barclays (Henry Skeoch)
  • Expect auction to be taken down well by the market given that broad risk sentiment feels somewhat better this week and expectations of ECB action soon

• Commerzbank (Benjamin Schroeder)
  • Shorter bond trades close to ECB’s deposit facility rate at -0.3%, close to being disqualified for PSPP purchases; may limit appetite for this bond
  • Elevated levels vs Bunds look attractive, particularly at the front end given expectations for further depo rate cuts from ECB

• SocGen (Marc-Henri Thoumin)
  • 3Y has seen some pre-auction cheapening on the curve, giving up ~3bps vs 02/2018s since Jan. 26; 11/2020 bond has been stable vs peers
  • 3Y-4Y sector has put in limited concession vs longer dates; at the margin, widening vs OLOs may support