The spread between Italian BTPs and German Bunds remained effectively stable at the opening of the day on May 26, with a slight increase that brought it to 72 basis points, despite the slight drop in yields, which returned below 3.70% for the first time in several weeks.
Today, auctions will be held for three different government bonds: the Short Term Btp, the 5-year Btp€ia and the 20-year Btp€ia. The minimum annual coupons have already been announced, but the definitive yields, including the issue value, will only be known once the auction has concluded.
The spread increases, yields fall
In the early hours of May 26th the spread between BTPs and Bunds increased slightly, reaching 72 basis points compared to the 71 at which it remained throughout yesterday. However, this is a stable opening, especially after the latest US military operation in Iran, which has further removed the possibility of a rapid resolution of the conflict in the Middle East through peace talks.
However, the yields on government bonds, both Italian and German, still decreased. The Bunds reached an average of 2.97% for the 10-year benchmarks, while the 10-year BTPs stood at just under 3.70%, a level they had not seen for weeks, again due to the conflict in Iran, which had destabilized their prices.
European spreads are also stable
The government bonds of the other large European countries also remained stable in the early hours of today 26 May, without shocks from the point of view of the differential, but with a slight drop in yields in some cases.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 2.97% | – |
| Italian BTPs | 3.69% | 70 |
| French Oats | 3.52% | 62 |
| Spanish bonos | 3.40% | 43 |
Spanish Bonos saw the spread with Bunds widen slightly to 43 points but generally maintained yields at 3.40%. The French Oat instead fell below 3.60%, bringing the differential to 62 basis points.
The auctions at the end of May
The Treasury begins the end-of-May auctions today, with that of three-year Short Term BTPs and two different BTP€i, the bonds indexed to Eurozone inflation.
| Government bonds | ISIN code | Expiration | Annual coupon | Maximum amount offered |
|---|---|---|---|---|
| Short Term BTPs | IT0005692410 | 02/28/2028 | 2.20% | 2.5 billion euros |
| Btp€ia 5 years | IT0005657348 | 08/15/2031 | 1.10% | 1.5 billion euros |
| Btp€ia 20 years | IT0005706293 | 02/15/2046 | 2.25% | 1 billion euros |
The six-month BOT auction will take place tomorrow, with the following characteristics:
- Isin code IT0005711749;
- expiry date 30 November 2026;
- amount offered 7.5 billion euros.
The auctions will end on May 28, with medium and long-term BTPs. In June, however, there will be a special issue dedicated to savers, with the new Btp Italia Sì.
