France taps 2 OATs on........>

FRANCE AUCTION PREVIEW: France taps 2 OATs on Thursday for E6.5-7.5bn and 3

linkers for E1.25-1.75bn. On offer are the 0.00% Feb-21 and 0.00% Mar-23

nominals and the 1.10% Jul-22, 1.85% Jul-23 and 0.10% July-47 inflation-linked

issues.

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

Political uncertainty in Italy could weigh on auctions across the euro bloc.

- RV: The nominal issues have sold off since the beginning of May, with the

Feb-21 trading at -0.306% and Mar-23 at 0.099% from -0.362% and 0.012%

respectively on May 3. The asset swap spread for both issues has held relatively

stable since the last auction on April 19, with the Mar-23 swap spread trading

32bps inside the comparable EURIBOR. The 2-10Y French sovereign curve has

steepened to 133bps from the month low of 129bps on May 3, with the 2-5Y spread

widening by 5bps over the same period. Inflation breakevens continue to grind

higher, with the 5-year benchmark touching 1.348% on May 16 from 1.188% at the

beginning of January.

- RESULTS: Announced 10mins after the 0855GMT cut-off. Linkers +1 hour.