The placement of BTPs at auction for medium and long-term securities has concluded. Yields were assessed as rising sharply due to the low selling price of 15-year bonds in particular. The latter, which already started from a coupon of 3.95%, reached returns of 4.84% gross, exceeding 4% net.
The other two products, a 3-year BTP and another 7-year BTP, also achieved notable returns, of 3.69% and 4.24% respectively. These are relatively predictable results, given that these were advanced tranches of products already on the market for weeks.
How the BTP auction on October 13th went
The Treasury managed to place all 7 billion euros in BTPs scheduled for the October 13 auction. The amount was divided as expected into:
- 2.5 billion euros of the 3% 3-year BTP expiring on 15 September 2029;
- 3 billion euros of the 3.35% 7-year BTP expiring on 15 September 2033;
- 1.5 billion euros of the 3.95% 15-year BTP expiring on 1 October 2041.
Coverage ratios were also good, all above 1.50. However, yields have adapted to the latest market dynamics, which have not been particularly favorable to the Treasury.
BTP yields have increased significantly
The increase in yields was very significant across all products and never less than 26 basis points:
- the 3% 3-year BTP expiring on 15 September 2029 had a yield of 3.69%, 27 basis points above the last tranche;
- the 3.35% 7-year BTP expiring on 15 September 2033 had a yield of 4.24%, 26 basis points above the last tranche;
- the 3.95% 15-year BTP expiring on 1 October 2041 had a yield of 4.84%, 61 basis points above the last tranche.
How to interpret these results
The results were partly predictable, but these are still very high returns. All these BTPs were already on the market and, at least in the case of the shorter-term ones, the returns were similar to those obtained: 3.70% for the 3-year and 4.12% for the 7. It is the 15-year that went much beyond expectations, given that it was trading at 4.58%.
The market has therefore priced this product very unfavorably, deeming it uncompetitive with others on the market. Indeed, in a context in which 10-year BTPs yield around 4.50%, it is a government bond with a relatively low coupon.
Why BTP yields are so high
The reasons behind these results are multiple and, unlike in the past, they do not have much to do with Italy’s debt problems. Even if the financial situation of our country is a factor of weakness, it is the entire international bond market that is in a precarious condition.
The basis of this crisis is the interest rates on deposits, which are high due to inflation driven by wars that compromise the energy market. Added to this is a long-term trend: large pension funds, in several countries, are no longer obliged by law to purchase government bonds, and this is flooding the market with bonds.
Finally, there is a lot of competition for available capital. It is not only states that are looking for loans, but also large companies, especially technology companies to finance the necessary infrastructure for artificial intelligence. In 2026 big tech has already issued bonds worth more than the Italian public debt.
