AUCTION PREVIEW: BTP 10Y Value vs Peer; 5Y Special in Repo
Source: BFW (Bloomberg First Word)
People
Antoine Bouvet (Mizuho Financial Group Inc)
Luca Cazzulani (UniCredit SpA)
Marc-Henri Thoumin (Societe Generale SA)
Michael Leister (Commerzbank AG)
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UUID: 7947283
(Bloomberg) -- Italy sell 06/2021 for EU2b-EU2.5b, 06/2026 for EU2-EU2.5b, and CCTeu 07/2023 for EU1.25b-EU1.75b at 11am CET.
Alert: HALISTER1- 10Y sector offers value vs peers, 5Y sees less relative value but should benefit from short base among dealers; reduced sizes, stabilization since Brexit outcome also supportive, say analysts
- Commerzbank (Michael Leister)
- Italy “playing it safe” with EU2b-2.5b ranges for conventional BTPs, among lowest ranges YTD
- Sharp underperformance vs SPGBs this week, should pave the way for relatively smooth auction
- Mizuho (Antoine Bouvet)
- Recovery in peripheral sentiment since Brexit referendum should allay any concerns about supply
- Italy has lagged in this move, perhaps partly due to supply, also more fundamentally the difficulty in recapitalizing banks, political uncertainty
- 10Y offers the best value, 5s10s looks steep, offer attractive pick-up
- 5Y bond should be well supported by the specialness on repo, suggesting a short base among dealers
- SocGen (Marc-Henri Thoumin)
- 10Y BTP has seen good concession vs neighboring bonds, while 5Y sector has been steady on the curve
- 7s10s Italy looks particularly steep outright and vs SPGBs
- Both issues offer a good pick-up vs SPGBs, but do not expect a reversal just now, momentum is too buoyant in Spain
- UniCredit (Luca Cazzulani)
- EU13.4b of redemptions may provide some support; with the worst of post-Brexit shock now passed, significant spread pressure in short term seems unlikely
- 5Y looks attractive vs 03/2021, ~4bps cheaper; 10Y is attractive vs peers, auction will be the last tap, new 10Y potentially due end of July
Source: BFW (Bloomberg First Word)
People
Antoine Bouvet (Mizuho Financial Group Inc)
Luca Cazzulani (UniCredit SpA)
Marc-Henri Thoumin (Societe Generale SA)
Michael Leister (Commerzbank AG)
To de-activate this alert, click here
UUID: 7947283