New 5y BTP / 3y CCTeu

Italy will come to the market today to sell E4.5-5.0bln of the new 5-year 0% Apr-26 BTP and E0.75-1.25bln of the 0.55% Dec-23 CCTeu.

• New 0% Apr-26 BTP: If the full amount of E5.0bln is taken up in today's auction, it will exceed the size of the launch auction of the previous 5-year BTP benchmark (the 0.50% Feb-26 BTP) which raised E4.5bln in August. However, it will of course be smaller in size than the syndicated launch of the 1.85% Jul-25 BTP in April 2020 which raised E10bln. The launch of these BTPs saw bids of E6.02bln and E65.2bln respectively. Outside of the launch, auctions for the 0.50% Feb-26 BTP have seen bid-to-covers in the range of 1.46-1.90x. We expect higher bids, but possibly a bid-to-cover below this range today. Looking at the 0.50% Feb-26 BTP vs the 0% Apr-26 Bobl, we note that the spread is around 68bp at the time of writing, around 8bp higher than the low seen on Feb 15 but around 20bp lower than the high seen on 22 Jan when Italian political uncertainty was at its peak.
• 0.55% Dec-23 CCTeu: The Dec-23 CCTeu was launched in January 2020 and was reopened a further five times through 2020. Its most recent auction was in October (with the new Apr-26 CCTeu having been launched and re-opened since then). There remains decent demand for CCTeus in general so we expect today's auction to be successful with a bid-to-cover in excess of 2x.
• Note that Italy will not hold a 10-year BTP auction this week following the syndicated launch of the 0.60% Aug-31 BTP for E10bln last week.
• Timing: Results will be available shortly after the auction closes at 10:00GMT.