Italian Sovereign

Italy’s yields hit a one month low as investors responded positively to comments from the country’s government suggesting it would stay within European Union rules on its upcoming 2019 budget. Some on the buy side believe there could be much more value to come from purchasing BTPs — and SSA bankers believe that the sovereign could bring another syndication this year if the budget fails to dent confidence.

Italy’s yields hit a one month low as investors responded positively to comments from the country’s government suggesting it would stay within European Union rules on its upcoming 2019 budget. Some on the buy side believe there could be much more value to come from purchasing BTPs.

Italy could return to the market for a second syndication this year, following the government’s highly anticipated 2019 budget, according to SSA bankers.

Italy sold over €7bn of government debt with the highest yields in four years on Thursday, but the outcome was a positive one with Italy receiving good demand, according to bankers.

Concerns over the upcoming budget from Italy’s populist government — as well as the months’ long economic crisis in Turkey — took its toll on government bond yields in the eurozone periphery this week. But a hunt for safe assets among investors did play into the hands of top tier credits.

KfW received solid demand for its €1bn global June 2020 benchmark tap on Tuesday, as investors lapped up the rising swap spreads caused by political tensions in Italy and economic crisis Turkey, and looked for safe assets.

Giancarlo Giorgetti, undersecretary to the Italian prime minister, has said that he expects the country to suffer an “attack” in the financial markets by the end of the month.

The Italian banking sector could be hurtling towards another crisis this autumn, with the government’s budget negotiations expected to put pressure on the bond market, worsening funding conditions for banks, write Jasper Cox and Bill Thornhill.

Italy’s coalition government is taking investors on a wild ride, with different voices emanating from the populist grouping quickly shifting sentiment among the buy-side. But the juicy spreads the sovereign offers over its peers has helped provide some respite from the sell-offs, said analysts.

Italy’s coalition government is taking investors on a wild ride, with different voices emanating from the populist grouping quickly shifting sentiment among the buy side. But the juicy spreads the sovereign offers over its peers has helped provide some respite from the sell-offs, said analysts.

BTPs sold off on Friday morning ahead of the Italian government’s crucial 2019 budget review, with yields reaching their highest level in two months.

LCH RepoClear has raised its margin on several Italian government debt securities, but the market reaction has so far been muted, according to analysts.