boom demand for over 40 billion

Clean sweep for the first tranche of the 10-year BTP€iathe Italian ten-year inflation-indexed government bond, which prompted a demand equal to eight times supply. A confirmation of the interest that Italian securities receive from national and international investors. The spread BTP Bund yesterday it stabilized around 125 pointswith the yield of the Italian ten-year BTP closing at 3.69%.

The placement of the BTP€i was carried out through a syndicate made up of five lead managers – Banco Bilbao Vizcaya Argentaria, BofA Securities Europe, Citibank Europe Plc, HSBC Continental Europe and Société Générale Inv. Banking – and by the remaining Specialists in Italian Government Bonds as co-lead managers.

The results of the auction

The marginal auction of the BTP€i closed with the placement of a first tranche from 5 billion of Euro. Demand was more than eight times greater than supply for a 41.89 billion euros from approximately 165 investors. The stock was placed at a price of 99.763 corresponding to a yield gross per year at issue by 1.83% paid in two semi-annual coupons. It should be remembered that the BTP€i expires on 15 May 2036, entitlement on 15 November 2023 and settlement set for 26 March 2024.

The previous auction

The previous BTP€i auction dates back at the end of July 2023when the bond expiring on May 15, 2033 was placed for an amount of 1.25 billion against a demand less than 2 billion, in none of the auctions held in 2023 was demand as important as in the March 2024 placement. But according to experts, the substantial demand may have been motivated by a more attractive yield which came close to 2%.

Sold-out also for the European green bond

On the same day the EU has also placed a green bond with record demand. The third NextGenerationEU (NGEU) Green Bond issue of the year raised one demand of 86.5 billion euroswhich turns out 12 times higher than the amount offered of 7 billion euros. The 25-year bond was placed at a yield of 3.339% and at a price of 98,481. The spread on the mid-swap is 80 bps, which is equivalent to 78.5 bps over the green Bund maturing on August 15, 2050 and 6.7 bps over the green Bund maturing on June 25, 2049.

The proceeds of the transaction will be used to finance green projects in the PNRRs of the Member States. The European Commission has so far issued around €35.5 billion of its €75 billion funding target for the first half of 2024.