FRANCE AUCTION PREVIEW: MT OAT Auction (2/2)
Feb-20 09:08
- The new long 3-year 2.40% Sep-28 OAT (ISIN: FR001400XLW2) will be launched, replacing the 2.50% Sep-27 OAT as the on-the-run issue. We note that every 3-year OAT launch since 2019 has seen at least 35% of the auction allocation and given the strength of French new issues recently (and the large auction size), we think there could potentially be scope for an even larger allocation and expect last year's E5.616bln launch size to be exceeded at the very least. The launch last year saw a bid-to-cover of 2.05x and reopenings saw bid-to-covers ranging from 2.37-3.26x from sizes of E3.238bln to E5.237bln.
- The on-the-run 5-year 2.75% Feb-30 OAT (ISIN: FR001400PM68) has been reopened at every MT auction since its launch and last month attracted a bid-to-cover of 2.60x for the E7.674bln sold - a record amount sold for a single line at a MT OAT auction.
- The 0% Nov-29 OAT (ISIN: FR0013451507) was last reopened in April 2023 and attracted a 2.97x bid-to-cover for the E2.055bln issued.
- Results will be available shortly after the bidding window closes at 9:50GMT / 10:50CET.
- France will also hold a linker auction later this morning with a bidding deadline of 10:50GMT / 11:50CET to sell a combined E1.50-2.25bln of the 0.10% Jul-31 OATei (ISIN: FR0014001N38), the off-the-run 0.10% Jul-36 OATei (ISIN: FR0013327491), the 0.95% Jul-43 OATei (ISIN: FR001400QCA1) and the 0.10% Mar-32 OATi (ISIN: FR0014003N51).
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Historical bullets
CROSS ASSET: Core Govies are edging lower
Jan-21 09:08
- US Treasuries are edging lower, TYH5 look to test its session and close the small opening gap down to 108.23.
- Note that the intraday low that shows on Bloomberg at 108.08+ is actually Yesterday's low.
- On this side of the Pond, BTP is sold in 1k and Gilt 750 lots.
- The German Bund now targets the Opening Gap down to 131.76.
- There's a small bid in the USDJPY on the back of the small move lower in Core Govie futures.
GILT SYNDICATION: 4.375% Jan-40 gilt: Books open
Jan-21 09:04
- Guidance: 4.25% Sep-39 gilt +4.00/+4.25bps
- Size: GBP Benchmark (MNI expect GBP5.0-6.5bln)
- Expected Settlement Date: 22-January-2025 (T+1)
- ISIN: GB00BQC82D08
- Joint Leads: DB (B&D / DM) / JPM / MS / Nomura / RBC CM
- Timing: Books open, today’s business
From market source
EGBS: Spreads To Bunds Marginally Wider
Jan-21 08:58
Trump’s apparent focus on imposing tariffs on Mexico & Canada in the coming weeks helps promote some modest EGB spread widening to Bunds today, although the major 10-Year cross-market differentials are within 1bp of yesterday’s closing level.
- Bund futures have pulled back from overnight highs, limiting the spread widening as the risk-off moves fade from extremes.
- 10-Year BTP/Bunds closed below 110bp, with cycle closing lows located at 106.4bp.
- Meanwhile, 10-Year OAT/Bunds last ~77.5bp, with French political and fiscal risks helping keep that spread above 75bp.
- Supply pressure is set to come via the French and Lithuanian syndications, with German green supply also scheduled.
