Italy will come to market.....>

ITALY AUCTION PREVIEW: Italy will come to market on Wednesday for a tap of

E4.75-6.0bn. On offer are the 1.60% Jun-26 BTP, 0.95% Aug-30 BTP and the Oct-24

CCTeu.

- BACKGROUND: Previous auction results (date, volume, average yield,

bid-to-cover): 1.60% Jun-26 BTP (27 Feb 2017, E1.0bn, 2.05%, 1.74x), 0.95%

Aug-30 BTP (31 Mar 2020, E3.5bn, 1.48%, 1.33x), Oct-24 CCTeu (29 Nov 2018,

E0.61bn, 2.22%, 1.82x).

- RV/HISTORY: BTPs have rallied sharply over the past week, potentially

reflecting a yield-seeking risk-on theme as Europe edges closer to relaxing

lockdown measures with Italy, specifically, seeing light at the end of the

tunnel as deaths caused by coronavirus appear to be falling. Nonetheless,

spreads over bunds remain wide, while an increase in future issuance to fund a

larger fiscal deficit coupled with a potentially slow and protracted recovery,

will continue to exert pressure on BTPs. 

- TIMING: Results are due out around 1000GMT