Italy sells E4.5-E6.5bn.......>

ITALY AUCTION PREVIEW: Italy sells E4.5-E6.5bn BTPs on Thursday. On offer are

the 0.05% Apr-21 BTP, 1.45% May-25 BTP, 2.45% Sep-33 BTP and the 2.95% Sep-38

BTP.

- BACKGROUND: Italy is on course for meeting its funding requirement for 2018

with 58% of planned issuance already fulfilled. Despite the recent political

turmoil, Italian auctions have continued to see fairly robust demand.

- RV/HISTORY: Volatility in the Italian BTP market has subsided since the

May-June blowout and yields have drifted lower. However, yields are still

materially above levels that prevailed in April. The 2.45% Sep-33 BTP is the

benchmark 15-year issue, which currently trades at 3.04%, down from a recent

high of 3.414% on May 29 and 167.5bps outside the comparable EUR swap.

Similarly, the 0.05% Apr-21 BTP is the benchmark 3-year bond, which trades at a

yield of 1.165%, down from a May peak of 2.836%, but still above the -0.160% to

0.145% range which prevailed from the beginning of the year up until mid-May.

- TIMING: Results are due shortly after the auction closes at 0920GMT.