Halister News

(Bloomberg) -- Italy will launch 5y BTP 0.45% June 2021 for EU3-3.5b, re-open the benchmark 10y BTP 1.6% June 2026 for EU2.5-3b and CCTeu Dec. 2022 for EU1.0-1.5b at 11am CET.

• Unicredit (Luca Cazzulani)
  • New 5Y BTP should come at a yield of around 0.4% (z- spread +37.5bp)
  • Interpolating the yield of BTP May 2021 and Aug. 2021 obtains roll of 12bp; fair value is likely a bit lower, considering both BTPs trade well above par
  • BTP June 2026 trades at yield of 1.35% (z-spread +79bp); with a yield pickup of around 5.5bp
  • With upcoming supply, and ahead of the quarter end, a quick tightening of 10Y BTP/Bund spread is not very likely
  • Some support for the auction may come from the expiration of the BTPi March 2016 (EU7.3b)
  • CCTeu Dec. 2022 is trading at attractive levels vs BTP curve

** At the long end, prefer CCTeu June 2022

• UBS (Nishay Patel)
  • Italy 3s5s has flattened more than 5s7s in the last 6- mo. and is at the flatter end of 1-yr range
  • 10y Italy has cheapened on 5s10s30s over the last week
  • Italy 5s10s has flattened in March, after being at the steeper end of range since Aug. 2015
  • 5y Italy is at the richer end of 9-mo. range vs Ireland
  • Italy 5s10s has flattened less than France 5s10s YTD, driving the box spread to 1-yr wides