On the morning of November 12th the spread between Italian BTPs and German Bunds fell slightly, reaching 104 basis points. Yields reached 4.35%, continuing to grow compared to the lows reached at the beginning of the week.
Government bond auctions began yesterday. The annual Bots, placed for 8.5 billion euros on the market, reached a gross yield of 3.20%. Today, however, auctions will be held for medium and long-term securities, from which much higher returns are expected: starting with coupons of up to 4.10%.
Spreads and returns are essentially stable
No major movement in the government bond markets at the opening of November 12th. The spread fell by only one point compared to yesterday’s opening, rising by the same number of points if we compare it with the closing, when the differential had reached 103 basis points.
Likewise, returns were identical to those at the start of November 11, with a slight increase compared to the end of the European markets session. Complicit in this stalemate is the stability of the price of oil, which reached 87 dollars a barrel in the morning, while attempts at rapprochement between the USA and Iran continue in the Middle East.
We are actually waiting to understand how the formation of the government will go in Israel after the elections which saw the opposition to the outgoing Prime Minister Benjamin Netanyahu win. An executive with the support, even if only external, of the Arab parties could represent a step forward towards a less active phase of the conflict.
The other European countries are also stable
As with Italy, Spain and France are also essentially stable as regards spreads and yields of their respective government bonds. Madrid’s Bonos see the spread rise slightly to 57 points, with yields of 3.88%.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.31% | – |
| Italian BTPs | 4.35% | 104 |
| French Oats | 4.79% | 148 |
| Spanish bonos | 3.88% | 57 |
Same situation for the Oat, at 148 basis points from German Bunds, with ten-year yields just under 4.80% due to the incessant pressure of the financial markets on Paris’ debt.
BOT yields at 3.2% after the auction, medium and long-term BTPs issued today
The annual BOT auction ended yesterday, during which the Treasury placed 8.5 billion euros in government bonds maturing next year. Yields topped 3.2% gross, quite high for such short-lived securities. Today, however, the auction of medium and long-term bonds will be held. The ministry will make available:
- a 3-year BTP, ISIN code IT0005716839, with an annual coupon of 3%;
- a 7-year BTP, ISIN code IT0005722845, with an annual coupon of 3.35%;
- a 20-year Green BTP, Isin code IT0005631608, with an annual coupon of 4.10%.
The next government bond auctions will be held:
- the auction of Short Term BTPs and BTP€i on 25 November;
- the second Bot auction on November 26;
- the second auction of medium and long-term bonds will be held on November 27th.
