HALISTER1: AUCTION PREVIEW: OLOs Offer Value Vs France, Special in Repo

AUCTION PREVIEW: OLOs Offer Value Vs France, Special in Repo

(Bloomberg) -- Belgium to sell 1% 06/2026, 1% 06/2031, 1.9% 06/2038 for EU2.2b-3.2b at 11:30am CET. Analysts highlight value vs OATs; some of the bonds trade special in repo, which bodes well for supply.
  • Mizuho (Antoine Bouvet)
    • Expect the supply to be supported by the trade special nature of 06/2026 and 06/2038 on repo, which hints at a short base in those bonds
    • See good value in RV for the 10/2026 issue, cheap on 2022/2026/2031 butterfly, more neutral the other two issues
  • ING (Martin Van Vliet)
    • Relative-value considerations take a back seat amid imminent Brexit fears, growing ECB QE distortions
    • 10Y OLOs offer pick-up of ~4bps vs OATs, ~3bps tighter than recent wides; long-end OLOs offer 7bps, 9bps pick- up, respectively, which is at top end of recent range
    • 10Y, 2038 issues trade special in repo, suggesting a short base in these lines, bodes well for a smooth take- down
  • Unicredit (Alessandro Giongo)
    • 10Y attractive vs peers in terms of Z-spread, especially 03/2026, also offers value vs OATs
    • 06/2031 offers ~5.5bps pick-up vs OATs, cheapest levels in two months in Z-spread
    • 06/2038 trades at the cheapest level since Sept. 2015 vs OATs (6bps in Z-spread)
  • SocGen (Marc-Henri Thoumin)
    • 10Y has seen some pre-auction cheapening; overall the sector offers very limited value relative to the curve
    • 06/2031 bond has underperformed shorter-dated issues while 06/2038 has remained stable at the long end; two bonds have seen modest cheapening overall, both offer good pick-up vs other soft-core
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

People
Antoine Bouvet (Mizuho Financial Group Inc)
Alessandro Giongo (UniCredit SpA)
Marc-Henri Thoumin (Societe Generale SA)
Martin Van Vliet (ING Groep NV)

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