The Dipartimento Del Tesoro...>

ITALY AUCTION PREVIEW: The Dipartimento Del Tesoro on Friday taps its new 3-yr

0.05% Apr-21 BTP for E2.25-2.75bln, its new 7-yr 1.45% May-25 BTP for

E2.0-2.5bln, and benchmark 15-yr 2.45% Sep-33 BTP for E1.0-1.5bln.

- BACKGROUND: Italy last re-opened the Sep-33 on Mar 13, while the Apr-21 was

launched in April and the May-25 in March. Italy has financed around E106bln of

its 2018 planned issuance of E240bln. This auction comes amid BTP volatility,

with ongoing talks between the 5-Star and League to form a populist coalition.

- RV/HISTORY: BTPs have sold off in the week ahead of the auction, with the

curve steepening and spreads over Bunds and other peripheries widening amid

political uncertainty. In the past week the 15-yr yield is up by 15bps, with the

3-yr up 8bps and the 7-year up 14bps, with spreads increasing by a similar

amount as Bund and Bonos yields have been largely flat. Since its launch on Apr

12 at yield of 0.05%, the Apr-21 has sold off to 0.12%, with the spread over

Bunds rising by 8bps, while the May-25 is yielding 9bps under its March launch

yield but like the Apr-21 has sold off in the past month.

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