HALISTER1: AUCTION PREVIEW: Recent Cheapening Seen Benefiting OAT Supply

AUCTION PREVIEW: Recent Cheapening Seen Benefiting OAT Supply

(Bloomberg) -- France to sell 6% 10/2025s, 0.5% 05/2026s, 1.5% 05/2031 for EU7b-8b at 10:50am CET; recent cheapening following large duration supply last month makes valuations attractive, say analysts.
  • Commerzbank (Benjamin Schroeder)
    • Valuations look attractive again, following supply spree including new 20Y, 50Y OATs in mid-April; curves have started to re-flatten again after peaking last week
  • Unicredit (Elia Lattuga)
    • 10Y has cheapened ~20bps since the last tap, 15Y even more, as a result of very high duration supply over past few weeks
    • 05/26 has cheapened, looks attractive vs equivalent RAGB
    • OAT 10/2025, 05/2031 trade at relatively rich levels on the curve, cross-market has cheapened significantly to bunds over past month
  • Danske Bank (Arne Lohmann Rasmussen)
    • 10Y has lost a few bps to Germany over past two weeks following large 50Y risk that came to the market in April
    • Japanese investors favor OATs; given the positive fixed- income sentiment, bank expects healthy demand
  • ING (Martin van Vliet)
    • 10Y benchmark offers a 23bps spread over Eonia, which should ensure sufficient demand from bank treasuries
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Benjamin Schroeder (Commerzbank AG)
Arne Rasmussen (Danske Bank A/S)
Elia Lattuga (UniCredit SpA)
Martin Van Vliet (ING Groep NV)

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