Halister News

(Bloomberg) -- France to sell 1.75% 05/2023, 0.5% 05/2026, and 1.5% 05/2031 for EU8b-EU9b at 10:50am CET. Analyst views on the auctions are mixed, though they cite recent redemptions, ECB outlook and dealer demand as likely sources of support.

• HSBC (Theo Chapsalis)
  • New 10Y France sits a touch rich on the roll, though it can stay rich as it falls into June OAT future delivery basket
  • Front-end core bonds have dropped further below ECB depo rate, removing QE eligibility; central banks will need to push further up the curve to duration securities, which should flatten curves
  • EU25b in BTAN redemptions paid on Feb. 25 should support; recommend extending out of FRTR 11/2018s into new bond, or buying cross-market vs Germany

• Mizuho (Antoine Bouvet)
  • 7Y issue is particularly expensive on 5s7s10s; auctions to help cheapen the bond as repo is eased; current 10Y (11/2025) losses benchmark discount
  • 15Y bond trades more than 30bps expensive vs peers in repo, suggesting strong short base among dealers; auction to be supported by short-covering demand

• Barclays (Huw Worthington)
  • New 10Y trades ~8.5bps cheap vs old benchmark, in line with recent discounts; after recent underperformance vs Belgium, now offers attractive yield pick-up of ~4bps
  • 15Y has cheapened modestly vs peers though still looks expensive; has seen small cross-market cheapening vs Belgium
  • 7Y issue has built in meaningful concession, moving from expensive to cheap lvls on the curve; expect the auction to be a dealer event, should be well-supported