The spread between BTPs and Bunds increased slightly at the start of April 9th, reaching 79 basis points. Yesterday the spread collapsed following the truce announced between Iran and the United States in the Middle East and the consequent reopening of the Strait of Hormuz. The passage, however, is now closed again, due to Israeli bombing in Lebanon.
The first auctions of April government bonds will also begin today, starting with BOTs, and then continuing tomorrow with medium and long-term BTPs. Yields are down from peaks of 4% in recent weeks, but are still much higher compared to the beginning of the year.
Spread at 79 basis points: Bund and BTP yields
BTP yields increased slightly compared to yesterday’s opening. The truce between the US and Iran in the Middle East is proving to be more fragile than expected. In fact, Tehran almost immediately closed the Strait of Hormuz after Israel launched the most extensive bombing of Lebanon since the beginning of the conflict. Benchmark 10-year Italian government bonds reached an average yield of 3.76%, six cents higher than the opening on April 8.
German Bunds also followed a similar trajectory, going from a yield of 2.93% at the opening yesterday to 2.97% today. This difference resulted in the increase in the spread, which reached 79 basis points. The differential is now at the levels of March 18th. Before the start of the war, this mark had not been reached since October.
France and Spain stable
Spain managed to slightly reduce the distance between Bonos and German Bunds, taking advantage of the increase in yields on Berlin bonds. The 10-year Madrid benchmarks yield 3.42%, with a spread limited to 45 points, down one basis point from yesterday’s opening.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 2.97% | – |
| Italian BTPs | 3.76% | 79 |
| French Oats | 3.63% | 65 |
| Spanish bonos | 3.42% | 45 |
However, the spread between the French 10-year OAT benchmarks and the Bunds widened slightly, going from 63 to 65 basis points. Paris government bonds yield 3.63% and remain close to the levels of early 2026.
The BOT auction and other April issues
Today the Ministry of Economy and Finance will auction the first April government bonds. These are two different bots:
- A 12 month Bot, Isin code IT0005704447 expiring on 14 April 2027;
- A 3-month Bot, Isin code IT0005704454 expiring on 14 July 2027.
In total, the ministry hopes to raise at least 10 billion euros from this auction, with a possible further billion in additional placement. Tomorrow, however, the auction for medium and long-term BTPs will be held. Three different financial products will be issued:
- A 3-year BTP, Isin code IT0005689960;
- A 7-year BTP, Isin code yet to be assigned;
- A 15-year BTP, Isin code IT0005694630.
The other auctions to be held in April will put on the market:
- on the 24th the Short Btp and the Btp€i;
- on the 28th the Bots;
- on the 29th the medium and long term BTPs.
