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

ITALY AUCTION PREVIEW: The Italian finance ministry on Monday 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 close to 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 0.271%. Though
CTZ usually trade cheap to BTPs, since last auction the spread has gone from
6.9bps inside to 2.6bps outside Mar-20 BTPs, but as of this morning back to
trading 1.3bps inside. 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.

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