3/5/7-year OATs

France will look to sell E9.5-10.5bln of MT OATs tomorrow. On offer are the 3/5-year benchmarks as well as an off-the-run 7-year issue.

• 0% Feb-24 OAT: This will be the fifth auction of the 3-year OAT that was launched in January. Demand has remained very strong with bids exceeding E8bln at every auction to date. Today's auction will be the first to see a yield of higher than -0.60% achieved. There is currently E17.14bln of the issue outstanding.
• 0% Feb-27 OAT: The new long 5-year OAT was launched in April with E4.30bln sold from bids of E9.51bln. This led to a bid-to-cover of 2.21x. Indeed, bid-to-covers have not fallen below 2x in 2021 for any auction of the previous benchmark, the 0% Feb-26 OAT. We expect continued strong demand today.
• 0.75% Nov-28 OAT: The 0.75% Nov-28 OAT will be on offer for the first time since January when E2.25bln was sold with a bid-to-cover of 2.08x. At the time of writing yields were just below zero, substantially higher than the -0.46% level of the last auction. There is also a good chance that yields come in higher than the -0.04% achieved at the April 2020 auction. Despite the weakness in the German auctions this week, we don't expect to see this weakness translate across to weakness for OATs at auction.