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(Adds background, details on pricing)
By Matt Painvin
LONDON, March 7 (IFR) - The Republic of Italy is testing investor demand for bonds linked to eurozone inflation, becoming the first eurozone issuer to test the market depth for that type of debt in 2017.
The sovereign has started marketing a May 2028 euro benchmark at 13bp area over BTPei 3.10% September 2026.
It is the issuer's first foray in the format since May 2016 when it priced a €3bn May 2022 bond.
The marketing level sees the bond flat to 1bp cheap compared to the longer BTPei 1.35% September 2032, according to a trader.
An update on the guidance is expected at around 10am.
Deutsche Bank, JP Morgan, MPS Capital Services, Societe Generale and UBS were mandated for the deal on Monday.
The 144A/Reg S notes will be priced today. The bond is linked to the eurozone HICP ex-tobacco.
The issuer is rated Baa2/BBB-/BBB+/BBBH (negative/stable/negative/stable). (Reporting by Matt Painvin, Editing by Helene Durand, Julian Baker)