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Italy taps the market for.....>

ITALY AUCTION PREVIEW: Italy taps the market for E5.0-6.5bln on Thurs, selling
2.30% Oct-21 BTP, 2.50% Nov-25 BTP, 2.45% Sep-33 BTP, and 4.00% Feb-37 BTP.
- BACKGROUND: Italy has met 75% of planned 2018 issuance compared to 83% for the
- RV/HISTORY: Italian BTPs have faced renewed pressure since mid-September as
the populist government's budget plans and more confrontational style have
triggered fresh concerns over the fiscal outlook. The shorter end of the curve
has been particularly volatile. The 2-year benchmark currently trades at 1.375%
and has oscillated within a 0.630/1.557% range since the beginning of September.
Given the political ructions and size of these issues, tomorrow's auction will
be a key test of market appetite for higher yielding BTPs. At the last tap of
the 2.50% Nov-25 BTP E3.75bln was allotted at an average yield of 2.55% and
bid-to-cover ratio of 1.28x, while at the last auction of the 2.45% Sep-33 BTP
E1.25bln was allotted at an average yield of 3.04% and bid-to-cover ratio of
- TIMING: Results are due shortly after the auction closes at 0920GMT.

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