HALISTER1: AUCTION PREVIEW: Italy to Overweight Long-End Issues

AUCTION PREVIEW: Italy to Overweight Long-End Issues

(Bloomberg) -- Italy to sell 0.10% 04/2019s for EU1.75b-2.25b, 0.95% 03/2023 for EU2.25b-EU2.75b, 1.65% 03/2032 for EU1b-1.5b, off-the-run 3.5% 03/2030 for EU0.5b-1b at 11am CET.
  • Analysts see value in 3Y on the curve; views mixed on 7Y, while 15Y trades rich, due to domestic insurance demand.
  • Mizuho (Antoine Bouvet)
    • Noteworthy that auction is overweight 15Y sector, with up to EU2.5b to be sold, twice the average size of 15Y supply since the start of the year
    • 7Y issue looks cheap on the fitted curve, though may only start performing toward the end of its auction cycle
  • ING (Martin van Vliet)
    • 3Y trades at 2-3bps concession to fitted low-coupon BTP curve, looks attractive in ASW terms for bank treasuries, given positive ASW spreads for semi-core is generally in 10Y+
    • 7Y bond trades around flat to the curve; 03/2032 have persistently traded rich, given demand from domestic insurance companies for bonds trading close to or preferably below-par
  • Unicredit (Elia Lattuga)
    • Redemptions for EU14b will provide some support; first tap of the 3Y, recent front-end steepening suggests extending duration into auction bond, 3Y has also cheapened vs neighbors
    • 7Y has cheapened vs neighbors; looks attractive vs 04/2022 and 03/2024
    • Both longer bonds 15Y-20Y BTPs have cheapened recent amid recent 50Y supply speculation; though still remain at rather rich lvls vs 10Y, 30Y
  • SocGen (Marc-Henri Thoumin)
    • 3Y has seen minor concession vs other BTPs; offers good pickup vs SPGBs, expect convergence ahead
    • BTP 03/2023 has underperformed 11/2022 ahead of the auction; 2020/2023 spread looks steep outright and also vs SPGBs, which may help demand
    • Both longer-dated bonds look rich vs other BTPs, though has been some concession vs SPGBs, expect moderate interest in these bonds
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Antoine Bouvet (Mizuho Financial Group Inc)
Elia Lattuga (UniCredit SpA)
Marc-Henri Thoumin (Societe Generale SA)
Martin Van Vliet (ING Groep NV)

To de-activate this alert, click here

UUID: 7947283