HALISTER1: AUCTION PREVIEW: New 10Y BTP Looks Rich on Roll, Analysts Say

AUCTION PREVIEW: New 10Y BTP Looks Rich on Roll, Analysts Say

(Bloomberg) -- Italy to sell new 1.60% 06/2026 bonds for EU3.5b-4.0b, 0.65% 11/2020 for EU1.75b-2.25b, and I/L 12/2022 for EU1.5b-2b at 11am CET. Analysts mostly see the new 10Y bond as rich on the roll, offering little value.
  • UniCredit (Luca Cazzulani)
    • EU8b in coupon payments from Italy should support; after recent widening in core/peripheral, BTPs have stabilized at relatively high levels; remain positive on spreads
    • New 10Y BTP looks slightly rich on the roll, in RV and cross market vs Germany, Spain
    • 5Y has outperformed slightly vs peers; this is potentially the last tap of this bond
  • SocGen (Marc-Henri Thoumin)
    • 10Y BTP looks somewhat rich vs immediate neighbors, less advantageous roll than last time; offers good yield pickup vs shorter-dated bonds, though don’t expect curve steepening to reverse
    • BTP 11/2020 has cheapened modestly, though remains rich vs neighbors; expect limited interest in this bond
  • Barclays (Henry Skeoch)
    • 5Y has richened ~2.5bps on the roll over past three weeks from cheap lvls, still ~1bp cheap on the roll; cross-market, has cheapened ~5bps vs Spain in short term; looks to be supply-related concession
    • New 10Y trades ~1bp rich on the roll in grey market, offering little value; cross-market, has cheapened ~5.5bps vs Spain, primarily supply-related
  • Mizuho (Peter Chatwell)
    • New 10Y looks rich on the roll; given size of new 10Y, 5Y reopen will be limited size; 5Y has performed well on the Italian fitted curve, an encouraging sign ahead of the auction
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Luca Cazzulani (UniCredit SpA)
Henry Skeoch (Barclays PLC)
Marc-Henri Thoumin (Societe Generale SA)
Peter Chatwell (Mizuho Financial Group Inc)

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