The spread between Italian BTPs and German Bunds began to grow again at the opening, after an unstable day yesterday. The spread reached 116 basis points with yields reaching 4.58%, close to the record of early October and the peaks of autumn 2023.
In the meantime, the issuance of Valore BTPs and Valore BTPs together continues, recording another excellent day. The Treasury collected 4.1 billion euros in government bonds dedicated to savers, bringing the total to 8.6 billion.
Another peak for the spread, Italian debt suffers from the energy crisis
Already yesterday the spread had shown signs of instability, after a few days in which the differential had stood at around 110 basis points. At the opening, the difference in yields between Italian BTPs and German Bunds widened, reaching 116 basis points, two points from the recent peak at the beginning of the month.
Yields are close to record highs
Yields also show signs of approaching recent high levels, reaching 4.58%. This is a significant problem for the Government. Preliminary data on the budget law have shown that the State has no additional resources to spend, so much so that even the request to adjust the salaries of magistrates, from 1 billion euros of expenditure, could be postponed.
Further interest on the debt, especially as a replacement for low-cost securities such as those issued before 2020, risks worsening the situation.
Oil is scary
The pressure on Italian public debt continues to be determined by the increase in oil prices. On the morning of October 21st the WTI almost reached 100 dollars a barrel. This is despite the Gulf countries exporting more oil than at the start of the war.
However, the costs remain high. Between the Iranian mines in the Strait of Hormuz, which set an oil tanker on fire just yesterday, and the Houthi attacks on Saudi infrastructure, the market continues to be unstable and insurance companies are weighing on crude oil transport.
Pressure on European stocks continues
The consequences of the oil crisis are felt throughout Europe. The Bonos reached a spread of 64 basis points, with yields well above 4%.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.42% | – |
| Italian BTPs | 4.58% | 116 |
| French Oats | 4.96% | 154 |
| Spanish Bonos | 4.06% | 64 |
However, it is French debt that is most under pressure. The Oats are 154 basis points away from the Bunds, with average yields now close to 5%.
How Btp Valore are doing
Yesterday was also a positive collection day for Btp Valore. The Treasury has placed more than 4 billion euros of securities reserved for retail investors on the market. The total thus reached 8.6 billion. The issue will end on October 23. The next regular auctions, however, will be:
- the auction of Short Term BTPs and BTP€i on Tuesday 27 October;
- the Bot auction on Wednesday 28 October;
- the auction of medium and long-term bonds will be held on Thursday 29 October.
