Italy's Dipartimento Del......>

ITALY AUCTION PREVIEW: Italy's Dipartimento Del Tesoro taps Mar-20 CTZ for

E1.25-1.75bln, 0.10% May-23 BTPei for E0.75-1.25bln and the 2.55% Sep-41 BTPei

for E0.75-1.25bln.

- BACKGROUND: Despite the recent political turbulence, auctions have been

reasonably well covered since the general election. As it stands, Italy has met

54% of planned issuance for 2018.

- RV/HISTORY: Despite collapsing from the highs seen at the height of the

political turmoil, Italian BTP yields remain elevated compared to the run-up to

the election. The benchmark 2-year BTP yield has pushed back up to 0.959% from a

June low of 0.524%. The 10-year has similarly sold off, with the yield trading

at 2.797% from 2.549% on June 20. Now that the curve volatility has subsided, it

is clear that the 2s10s spread has edged lower. The spread currently trades at

183bps, having previous held above 200bps since the beginning of 2017 and up

until May 24.

- TIMING: Auction cut-off is 1000BST, results are around 1015BST