Top of Range Sold, Oct-27 Line Sees Weak Results

The bid-to-cover ratios of today’s MT OAT auction were mostly in line with similar maturity auctions seen this year.

• The exception came via the 2.75% Oct-27 OAT, where the cover was below the ’24 average for MT OATs, while it was the only line auctioned that saw the low-price print below pre-auction mids.
• The average bid-to-cover ratio for MT OAT auctions this year was 2.58x.
• The amount sold was E10.5bln, matching the top of the target range. However, this was the smallest top end of a range for a MT OAT auction seen since January 2023 (excluding the August 2023 auction - with August auctions always smaller), with the AFT seemingly cognisant of risks surrounding the French political uncertainty.
• Markets don’t seem worried by the auction results, with the fact that the top end of the sales target range was sold providing some reassurance.
• 10-Year OAT/Bunds tighten by a very modest 0.5bp vs. pre-auction levels.
• Little net movement also seen in French swap spreads.