Nervousness belies stability
The focus of attention on the secondary covered bond market in the last 48 hours has been firmly on the sovereign market — and France in particular. A 20bp tightening in the 10 year OAT on Thursday and a short lived tightening again on Friday has left French covered bonds looking cheap. But uncertainty is high, bid-offer spreads are wide, clients are sidelined and dealers are looking to pare back inventory.
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