France tap 3 OATs Thursday...>

FRANCE AUCTION PREVIEW: France tap 3 OATs Thursday for E6.5-7.5bln indicative

size. On offer is the OAT 0.0% May-21, OAT 0.0% Mar-23 and 0.5% May-25 OAT. An

hour later France sells E1.25-1.75bln OATi 2.1% Jul-23, OATi 0.1% Mar-28 and

OATei 1.8% Jul-40. 

- BACKGROUND: There are no French coupon or redemption payments to help.

Statistics show a pick up of inflows into French life insurance funds but

impending Japanese FY end is important for OATs and suggests avoiding the 10Y

area. 

- RV: The OAT 0% May-21 stands out as cheap in a micro-RV sense when its ASW

spread is looked at to other OATs in the sector. 2-10Y France has flattened to

lowest since late January but 10-30Y spread has widened to 85bp, the steepest

since late Jan. The 10Y appears expensive on the curve. Demand for linkers has

evaporated in the past 2-3 weeks as early 2018 fears of a global inflation spike

have moderated considerably. The BEI for for the OATi28 has fallen from 147bp on

27 Feb to 139bp today. 

- RESULTS: Nominal cut-off at 0950GMT, results 10mins later. Linkers +1 hour.