Ionnis Sokos and Anne Karina Asbjorn at........>

BTPS: Ionnis Sokos and Anne Karina Asbjorn at Nomura have taken profit on two

bearish BTP trades that they initiated in August.

- These trades were built on the premise that the Italian election and reduction

in APP would cause BTPs to weaken.

- Specifically, Nomura has taken profit on long CCT Oct-24 vs BTP Dec-24 (done

on an asset swap spread basis) and their 5-10Y BTP steepener.

- Regarding the election a coalition now looks most likely and "As things stand,

the main market-friendly scenario involves a centre-right (or broader) coalition

while the risk scenario is for new elections, with the latter less likely.

Moreover, both the League and Forza Italia parties have moderated their tone

lately."

- Sokos and Asbjorn now suggest a BTP-Bonos compression trade, with entry at

53bp, target 30bp and stop at 65bp. Carry is 2bp every 3 months.