The Dipartimento Del Tesoro...>

ITALY AUCTION PREVIEW: The Dipartimento Del Tesoro on Wednesday taps the Sep-25

CCTEU for E1.25-2.00bln, the 5-year 0.95% Mar-23 BTP for E1.00-1.75bln, and the

10-year 2.00% Feb-28 BTP for E1.50-2.25bln.

- BACKGROUND: After completing sales of CTZ/BTPei on Monday and BOTs Tuesday,

all eyes are on this auction in the midst of extreme bond market volatility and

soaring spreads. Such is the negative sentiment surrounding Italian debt that on

Tuesday, MNI was asked by clients whether BTP sales have ever been cancelled due

to market volatility - the short answer is no; MNI has seen size reduced and

such, but no cancellations (since 2011, at least).

- RV: The Mar-23 was tapped Apr 27 at avg yield 0.56% with cover of 1.36x, and

the Feb-28 the same auction at 1.7% with 1.38x cover. But since then, Italian

bonds have collapsed, and the 5-year is now yielding 2.66% and the 10-year

2.98%. This is the first tap of the Sep-25 CCTEU, which launched also on Apr 27

at avg yld 0.23% and 1.42x cover. Market conditions are clearly poor, so the

results will be scrutinised. E18.9bln in Italian redemptions this week may help.

- RESULTS: Auction cut-off is at 1000BST, with results around 20 minutes later.