BGP Confederation peerings

When configuring BGP Confederations, iBGP routers that belong to the same sub-AS must connect to each other either directly (or a route reflector), or via another iBGP router in the same sub-AS. Peerings between iBGP routers that can reach each other through other sub-ASes cannot create iBGP peerings.

https://networklessons.com/bgp/bgp-confederation-explained/