Daily Bond Auction Preview - 28th August 2026
Previews of UK, EU and US government bond auctions including the size of issuance, time of the auction(s), estimates, redemptions, coupons and analyst commentary.
Italy to sell EUR 5.75-7bln 3.15% 2031, 4.00% 2036 BTP and EUR 1.5-2bln 1.773% 2034, 1.645% 2035 CCTeu
Analysis:
- Currently, the Italian 10yr yields trades at 4.10%.
- Focus in Italy over the coming months will be on politics, with a general election set next year. Recently, Cirielli, a senior member of Meloni's party opened the door to a potential alliance with the far-right party National Future. This goes against Meloni's stance that her party is not planning to team up with the far-right party. Furthermore, other officials within the Meloni camp have come out and shot down Cirielli's comments, stating that it is his own position.
- A key sticking point for the electorate is the rising gas prices, due to the conflict in the Middle East. The government has extended a tax cut on diesel fuel prices until September 5th, adding to the long line of fuel-tax relief measures. Although the new aid will be financed by collecting taxes from energy companies earlier, further financing will be harder to find.
- All being said, investors have been favouring Italian debt over its French counterpart, with France set for an important Presidential election in 2026. The IT-FR 10yr spread now trades at -0.02%, showing that BTPs are seen as more safe compared to OATs.
Recent History:
- 3.15% 2031: b/c 1.59x, avg. yield 3.39%
- 4.00% 2036: No recent history
- 1.773% 2034 CCTeu: No recent history
- 1.645% 2035 CCTeu: No recent history
Results due shortly after the 10:00BST bidding deadline
Mid-size Italian supply combining a benchmark BTP tap with CCTeu floaters is a routine test of absorption rather than a market event in itself; the tell at these sales is the bid-to-cover against recent history on the tapped line and the tail versus prevailing secondary yields, with off-the-run and floater tranches typically drawing a different, more domestically anchored bid than the benchmark. The structural backdrop here is unusual: BTPs trading through OATs on the 10yr spread inverts the long-standing pattern in which Italy carries the wider premium, a configuration that has appeared only when French-specific political risk has dominated while Italian fiscal execution stayed quiet. That positioning makes the sale as much a read on the IT-FR relative-value complex as on outright Italian demand, since a soft auction funded out of OATs would compress the inversion while strong cover entrenches it. The named risk is political, with jockeying inside the governing coalition ahead of the election and fuel-tax relief financed by pulling energy taxes forward, a mechanism that has historically deferred rather than resolved funding questions and raises sensitivity to any slippage on deficit optics. The immediate follow-ons are the cover ratio and concession against the stated 4.10% 10yr backdrop, the spread reaction in BTP-OAT, and whether the political noise widens beyond a single official's remarks.