Halister News

(Bloomberg) -- Italy to sell bonds for up to EU8.5b across 0.05% 2019, 0.65% 2023 and 1.65% 2032 at 11am CET; Ireland to sell EU1b 1% 2026 bonds at 11:30 am CET.

• Citigroup (Aman Bansal)
  • Best value in switching from rich May 2020 BTP into new Oct. 2019; May 2020 is the richest BTP on the 2-10yr curve vs fitted curve and also looks historically rich vs 3yr sector
  • Spread should perform on further Italian underperformance, which has been marked by the steepening of sub-10yr curve so far
  • Remain constructive on the Irish sovereign with relatively high growth rates (5.2% expected by Citi in 2016) and a notable fall in the deficit (from -10.3% in 2011 to just -1.8% last year)
  • Better relative value on the Irish domestic curve given a degree of concession rather than on a cross-market basis

• Commerzbank (David Schnautz)
  • Auction should be an opportunity to implement strategic overweights in IRISHs vs OATs and OLOs in the 10y area, eyeing parity in ASW
  • Ireland’s National Treasury Management Agency unlikely to tap the bond at final 2016 auction on Nov. 3
  • Any supply-induced spread re-widening in Italy vs Spain would be an even better entry opportunity for tactical overweights in BTPs vs SPGBs, especially in the 10y area