France taps 4 longer.........>

FRANCE AUCTION PREVIEW: France taps 4 longer maturity lines today for between

E8-E9bln indicative size: the OAT 1% May-27 (10Y bmk), OAT 1.25% May-36, OAT

4.5% Apr-41 and OAT 4% Apr-60. 

- BACKGROUND: There is an important ECB meeting today and PSPP has been big in

10Y+ OATs. There is also quite a lot of duration today but there are no

redemption or coupon payments to help. The OAT 2048 was only issued in mid-May

but saw exceptionally strong demand via syndication but there is little dispute

that the sector has performed poorly relative to other EGB credits.

- RV: The 10+ year area of France looks quite cheap when compared to most but to

the Dutch 15-30Y in particular. The 30Y spread is close to recent highs of 59bp.

The box spread between 5-30Y France and Germany is also close to highs. Data

show large (E28bln) domestic bank selling of French debt in June and July but

the ECB has been overbuying in PSPP and mostly at quite long average maturities.

Despite the strength of PSPP buying, the bid is lacking from the private sector.

- RESULTS: Nominal Bidding closes at 0850GMT. Results due around 0900GMT.