On Tuesday morning, Italy.....>

ITALY AUCTION PREVIEW: On Tuesday morning, Italy sells CTZ and BTPei: between

E1.75-2.25bln of Jun-21 CTZ, and a combined E0.5-1.0bln of 1.30% May-28 BTPei

and 2.55% Sep-41 BTPei.

- BACKGROUND: The 2-yr CTZ was last sold on May 28 at 0.818% yield and 1.46x

cover. The May-28 BTPei sold the same day at 1.87% real yield and 2.19x cover.

The Sep-41 BTPei last sold Jan 25 at 1.69% real yield and 1.92x cover.

- RV: This sale of the 10-Yr and 30-Yr benchmark BTPeis comes following a major

retreat in European real yields. The 30-yr real yield was trading close to 2.50%

for most of May, but is now below 2.0%. The 10-Yr has seen a parallel move, down

from 1.87% in Mid May to 1.32% last. With BundEi yields anchored, this has meant

a narrowing in the spread to Germany by a similar margin (~50bps) to tightest

levels since mid-2018. Meanwhile, the 2-year zero coupon spread between Italy

and Germany has come down 30bps to 85bps since the end of May.

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