Halister News

(Bloomberg) -- France to sell 3.5% 04/2020, 0.25% 11/2020, 2.25% 10/2022 for EU6b-7b; 0.10% I/L 03/2021 for EU1.5b-2b at 10:50am CET; analysts see limited concession, though expect latest ECB measures to continue to support French paper in this sector.

• Nomura (Pooja Kumra)
  • Likely to be final tap of 11/2020s, new 5Y OAT scheduled for April 21; small cheapening on micro flies since the ECB announcement; belly of the curve to remain key beneficiary of new LTRO, expect further spread compression to bunds
  • Recent outperformance of OLOs may be owing to Belgium coupon flow; this may fade; OATs may outperform as market starts to focus on France coupons at the end of April
  • Both 04/2020s and 10/2022s have seen small cheapening on micro flies over past 2-weeks

• Mizuho (Antoine Bouvet)
  • 04/2020 issue is too cheap by ~6.5bps on the butterfly to 10/2017 and 04/2022, expect demand on that basis
  • This will be final tap of 11/2020, this issue should richen on the roll going forward as its predecessors

• SocGen (Marc-Henri Thoumin)
  • New ECB policy measures have helped feed further spread compression in recent days, reviving demand for longer duration in core, soft-core
  • Limited concession in the 2020 issues; OAT 11/2020 has underperformed 04/2020 slightly since early Feb., prefer owning the slightly longer issue
  • 10/2022 offers value vs shorter maturities; risk-on mode in EGBs should support further flattening in near term