Citi Weigh In On BTP Valore Matters & Expect Some Widening Pressure In Coming Sessions

Citi suggest that “strong retail demand for peripheral EGBs has continued this week with €14.8bn of BTP Valore subscription over the first 3 days of the 4-day issuance program, perhaps partly driven by the extra yield on BTPs if held to maturity.”

• They go on to flag “another tranche of BTP Valore later this year. Together, these would put downward pressure on our annual BTP supply forecast of EUR310bn, which includes only around EUR10bn of retail issuance from this tranche onward.”
• “However, this might be more than offset if delays in NGEU disbursements require increased BTP issuance to fund projects.”
• “For BTPs, this issuance has failed to arrest the reversal of last week’s tightening, partly due to significant Euro area sovereign issuance pressure elsewhere in our view.”
• “Overall, we expect the 10yr BTP-Bund spread to return to the YTD anchor of 180-188bp over coming sessions.”