HALISTER1: Fade Stretched Belgium Bond Outperformance vs Netherlands: Citi

Fade Stretched Belgium Bond Outperformance vs Netherlands: Citi

(Bloomberg) -- Prefer AAA/Aaa Netherlands vs AA/Aa3 Belgium given the spread is now at the tight end of the 2-year range, Citigroup strategists including Peter Goves write in client note.
  • Buy DSL 2.25% July 2022 vs OLO 4.25% Sept. 2022 at 5bp; target 14bp, stop 0bp
  • Strong rally in 6Y Belgium has driven spreads to DSLs into low single digits
  • At such levels, moves are looking a little over done both in terms of trading ranges and fundamentals
  • Risks include unexpected DSL supply in the belly of the curve or upgrades of the Belgian sovereign that might fundamentally justify a tighter spread
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Peter Goves (Citigroup Inc)

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