Italy will come to market.....>

ITALY AUCTION PREVIEW: Italy will come to market on Tuesday for the first of two

auctions this week. On offer are the 0.40% May-30 BTPEi and the May-22 CTZ for a

combined E4.0-5.0bn.

- BACKGROUND: Tomorrow's auction comes on the heels of last week's successfully

BTP Italia placement with over E22bn issued to institutional and retail

investors. The May-22 CTZ is a new issue, while the 0.40% May-30 BTPEi was last

re-opened on 24 Apr 2020 with E1.00bn sold at an average yield of 1.77% and

bid-to-cover of 1.52x.

- RV/HISTORY: BTPs have endured volatile trading during the second quarter on

the back of conflicting pressures ranging from the COVID-19 lockdown, the ECB's

new PEPP facility, the German constitutional court ruling on ECB QE, the recent

Franco-German E500bn recovery fund proposal and counter-initiative proposed by

the Frugal Four. These issues remain unresolved and in play, which will underpin

BTP volatility. Nonetheless, improved policy coordination between France and

Germany has been a net positive, underpinning periphery-core spread compression.

- TIMING: Results are due after the auction closes at 1000BST.