Italy re-opens CTZ 0%.........>

ITALY AUCTION PREVIEW: Italy re-opens CTZ 0% May-19 for between E1.0-1.5bln on

Tuesday alongside E1.0-1.5bln of the BTPei 0.1% May-22 and BTPei 1.25% Sep-32

- BACKGROUND: This is the 5th outing for this CTZ but the yield has been

trending lower since it was first issued in May. The CTZ curve is also fairly

flat and offers little in the way of leaping off point. However, the May-19 CTZ

does look slightly cheap compared to the BTP 0.1% Apr-19, having built in a

concession in the past few days. Regarding the linkers, the BTPei 0.1% May-22

has a breakeven of 0.88% when measured against the 1.2% Jan-22 and is elevated

by an historical perspective but well below the core inflation rate. Much of the

elevated breakevens is seasonal and linked to recent oil price movements. The

BTPei1.25% Sep-32 has seen less of a rise in breakevens but is still close to

highs.

- RV/HISTORY: The CTZ May-19 saw the previous auction cover 1.35x at a yield of

-0.14%. The BTPei May-22 was issued in June with a -0.03% real yield and robust

2.72x cover. The Sep-32 has not been issued since May.

- TIMING: Auction cut-off is 0900GMT/1000BST, results are around 0920GMT.