Italy will come to market.....>

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

E8.5-10.0bn. On offer are the 0.30% Aug-23 BTP, 0.95% Sep-27 BTP and the 3.10%

Mar-40 BTP.

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

bid-to-cover): 0.30% Aug-23 BTP (11 Jun 2020, E5.0bn, 0.46%, 1.37x), 3.10%

Mar-40 BTP (13 May 2020, E1.0bn, 2.49%, 1.63x). The 0.95% Sep-27 BTP is a new

issue.

- RV/HISTORY: BTPs sold off at the beginning of the week, although the dominant

trend since the beginning of May have been bull flattening of the curve. Spreads

over bunds have also narrowed over this time with the 10-year BTP-Bund spread

trading down to 165bp from a YTD high of 279bp on 17 March. This has been

underpinned by the ECB's PEPP purchases, which have injected a strong bid and

inherently reduced idiosyncratic risk for the Italian bond market. There will no

significant data releases ahead of the Tuesday. auction, with market attention

fixed on this week's ECB meeting.

- TIMING: Results are due after the auction closes at 100BST.