On Thursday, Italy sells......>

ITALY AUCTION PREVIEW: On Thursday, Italy sells E2.0-2.5bln of BTP 0.9% Aug-22,

E1.0-1.5bln of BTP 2.05% Aug-27, E0.5-1.0bln of BTP 2.2% Jun-27 and E1.5-2.0bln

of CCTeu Apr-25. 

- BACKGROUND: The settlement date for these auctions is 2 Jan and so there is no

need to fund these securities over year end. The Italian Treasury did this exact

combination of 5Y and two 10Y BTPs alongside a CCTeu at the same point last

year. 

- RV/HISTORY: Italian bonds have cheapened to Spain and Portugal in the past

weeks and this is in spite of the Catalan elections. There does appear to be a

good concession. In December 2016, this auction combination saw strongest demand

for the off-the-run 10Y, with the cover at 1.55x. None of the auctions were

particularly well or poorly bid. 

- The 6 auction average bid-cover for CCT auctions is 1.60x. For the 10Y BTP

2.05% Aug-27, the equivalent number is 1.55x, with most recent yield of 1.73%,

well below the 1.92% that the issue currently provides. 

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