Thursday, Italy sells.........>

ITALY AUCTION PREVIEW: Thursday, Italy sells E3.5-4.0bln of the new 3Y BTP 0.2%

Oct-20, E1.5-2.0bln of BTP 1.45% Nov-24, E1.0-1.5bln of BTP 3.45% Mar-48.

- BACKGROUND: There is a E13bln CCT redemption that coincides with the

settlement of Thursday's auction together with E0.3bln of Italian coupons, which

might help the shorter maturity issues here. 

- RV: In the grey market, the new 3Y BTP is trading at an 8.7bp roll to the

existing 3Y BTP. On Wednesday, the 2020 section of the Italian curve has

cheapened, possibly a concession into Thursday's decent issuance size. In terms

of cross country spreads, Portuguese swap spreads are tight to BTPs in the 3-4Y

area and Italy has cheapened to Germany. 3Y Italian debt does not look cheap to

Spain because of Catalonian risk; the spread is only 17bp. The Nov-24 is fairly

new and should see a decent bid. 30Y Italian debt is quite tight to Spain but

the 2048 syndication in June saw a E22bln book.

- HISTORY: The 6 auction average bid-cover for 3Y auctions is 1.6x but usually

lower for a new bond. 6m averages for the 7Y and 30Y are 1.36x and 1.66x. 

- TIMING: Auction cut-off is 0900GMT/1000BST, results are around 0920GMT.