Halister News

(Bloomberg) -- France taps OAT 2.25% May 2024, 0.5% May 2026 and 3.25% May 2045 for up to EU9b at 10:50 CET. Spain taps SPGB 0.75% July 2021, 1.95% April 2026 and 2.9% Oct. 2046 at 10:30 CET. Analysts see value in OATs and SPGBs in auction versus their respective curves.

• Citigroup (Puja Sawant)
  • OAT May 2026 looks cheap on Nov24-May26-Oct27 fly and OAT May 2045 has cheapened on May36-May45-Apr55 fly post announcement
  • Cross market, 10Y OATs look cheap vs RAGBs while 30Y OATs look to offer value vs OLOs
  • Also favor 10s30s OAT flatteners vs bunds given the persistent yield grab and attractive entry level
  • On the other hand, see limited value in OAT May 2024
  • SPGB July 2021 has cheapened on the microfly (Apr20- Jul21-Jan23)
  • April 2026 looks attractive on both the Apr24-Apr26- Oct28 microfly and the 5s10s15s curve
  • 20s30s spread has widened for Spain, in contrast to Italy

• Commerzbank (Christoph Rieger)
  • Regarding French auction, identify value in the on-the- run OAT May 2026 which has underperformed significantly vs the curve, with the 5s10s15s fly decoupling significantly from the bullish outright dynamics
  • Expect this to normalize and hence the 10Y sector to outperform once the auction is cleared
  • In Spain, the underperformance of 10Y SPGBs vs the curve has been even more pronounced
  • Yet with risk-off sentiment returning, investors might well require further concessions before adding duration again

• BofAML (Erjon Satko)
  • First tap of France May 2024 and May 2045 since Dec. 2015 and Jan. 2016 respectively
  • Supportive of BTPS over SPGBs in the 5Y sector
  • Expect lower trend growth in Spain; combination of high growth, high policy uncertainty and high fiscal slippage make for an unstable equilibrium