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Pullback Considered Corrective

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Holding Above Recent Lows

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BLOCK, Large 3Y Midcurve Put Condor

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France will come to the market this morning to issue three LT off-the-run OATs, none of which have been auctioned so far in 2021.

  • E6.5-7.5bln will be on offer and the bonds on offer will all have a 10-13-year maturity: the 1.50% May-31 OAT, the 5.75% Oct-32 OAT and the 1.25% May-34 OAT.
  • With no other off-the-run 10-13 year maturity OATs sold this year, the best comparables are the 0% Nov-30 and the 0% Nov-31 (the previous 10-year benchmark and the current 10-year benchmark).
  • These OATs were both offered in the July auction with strong demand for both. The 0% Nov-30 OAT saw E2.79bln sold from bids of E6.65bln (2.38x bid-to-cover) while the 0% Nov-31 OAT saw E4.18bln sold from bids of E8.93bln (2.14x bid-to-cover).
  • Note that 10-year OAT spreads to Bunds have been relatively stable over the past couple of months while OATs have rallied just under 30bp over the past month.
  • Timing: Results will be available shortly after the auction closes at 9:50BST/10:50CET.