The Italian finance...........>

ITALY AUCTION PREVIEW: The Italian finance ministry on May 28 will re-open

E1.25-1.75bln of 0.00% Mar-20 CTZ, and a combined total of E0.75-1.25bln of

0.10% May-22 BTPei and 1.30% May-28 BTPei.

- BACKGROUND: The CTZ/BTPei auctions begin a week in which Italy is likely to

move over the 50% mark of 2018 planned E240bln issuance. Recent political

uncertainty, and the fact that Mon is a US and UK holiday, could impact on

demand, with a large E18.85bln BTP redemption next week also a potential factor.

- RV: The Mar-20 CTZ was last tapped on 24 April, with E2bln sold, and cover of

1.583% with yield of -0.275%. That day marked the bottom of Italian spreads,

since which point the Mar-20 CTZ yield has risen from -0.195% to 0.390%. Though

CTZ usually trade cheap to BTPs, since last auction the spread has gone from

6.9bps inside to 2.3bps outside Mar-20 BTPs, making CTZs look a bit cheap. For

the linkers, May-28 BTPei was last sold the same day as the CTZ (cover 1.44x,

real yield 0.47%), the real yield is up 90bps at 1.327%, and about 102bps above

I/L Bunds. May-22 BTPei last sold in Feb (cover 2.1x, yield -0.41%).

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