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Today, Italy sells............>

ITALY AUCTION PREVIEW
ITALY AUCTION PREVIEW: Today, Italy sells E3.0-3.5bln of the new 5Y BTP 0.9%
Aug-22, E1.75-2.25bln of BTP 2.05% Aug-27, E1.0-1.5bln of CCTeu 1.1% Oct-24. 
- BACKGROUND: There are E28.9bln of Spanish redemptions/coupons on Monday and
E22.5bln of BTP redemptions/coupons to coincide with the settlement of this
auction on Tuesday. Month-end extensions might also help 10Y BTP demand and Citi
estimate this to be 0.12Y for Italy. As usual, Italy cancelled the mid-month BTP
auction and end-August linker. Demand has been strong for BTPs lately. The stars
are aligned for a good auction.
- RV/HISTORY: Fair Value of the BTP 1.2% Apr-22 to the new 5Y is around 13bp
according to Antoine Bouvet of Mizuho. Saumesh Dutta from Citi writes "we like
2s5s BTP spread flatteners vs SPGBs. The auction is also a good opportunity to
position in summer carry trades". 
- The 6 auction average bid-cover for CCT auctions is 1.6x and the yield at the
latest auction was 0.83% (0.75% today). For the 10Y BTP, equivalent numbers are
1.43x and 2.16% (compared to 2.095% yield today).
- TIMING: Auction cut-off is 0900GMT/1000BST, results are around 0920GMT.

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