Halister News

(Bloomberg) -- France to sell 0.0% 02/2019, 0.0% 05/2021 for EU5.5b-6.5b at 10:50am CET; also to sell I/L bonds for EU1.2b-1.7b at 11:50am CET. Analysts highlight concession for both bonds on the curve, value vs Belgium.

• Mizuho (Antoine Bouvet)
  • 5Y OAT yields have been stable above –0.18bps level, suggests little outright appetite to buy below here
  • Sector has underperformed on the curve, looks attractive in RV vs 3Y, 7Y sectors
  • Yields on 2019 have been rising to above ECB depo rate, raising prospect of better outright demand; bond has also lagged on the French fitted curve

• Citi (Puja Sawant)
  • 3Y looks cheap within a rich sector; compared to peers has cheapened significantly since auction announcement
  • OAT 10/2019 is richest bond vs fitted OAT curve, outperforming auction bond by over 3bps in last three weeks, spread now attractive at 2bps
  • 5Y has cheapened vs peers fly over past month; sector looks cheap vs fitted curve, especially on 3s5s7s fly
  • Cross market, 5Y France has cheapened vs Belgium over past month, looks cheap over a 6-month history; switch to OAT 05/2021s from OLO 09/2021s looks attractive

• SocGen (Marc-Henri Thoumin)
  • 2021 sector offers some value relative, 2019/2021/2023 OAT fly looks high ahead of auction, expect better demand for this bond
  • OAT 2019 offers good pick-up vs OLOs, expect some convergence after the auction