Rising start for the spread between BTP and German Bund. The yield differential between the two ten-year bonds stands at 72.7 basis points, up by more than one point. However, the yield on Italian bonds rose by more than three basis points, to 3.43%. Despite this slight fluctuation, the spread remains at historically low levels, sending positive signals to the markets and making Italy increasingly attractive to investors.
The spread as an indicator of stability
The BTP-Bund spread represents the difference in yield between the 10-year Italian government bond and the German counterpart, considered the safe haven par excellence in Europe. This spread measures the risk premium that investors require to lend money to Italy instead of Germany. According to experts at Generali Asset Management, the spread could fall to as much as 70 basis points in the coming weeks, given that issuance activity is set to decline.
The most significant data is that the yield of the Italian 10-year bond remains below that of the French Oat, which stands at 3.46%. This means that today Italy finances itself at lower costs than France, marking a clear change of pace in the perception of risk in recent years. The yield differential has therefore moved to values in line with those observed before the sovereign debt crisis of the last decade.
The role of rating agencies
The recent promotion by Moody’s has contributed significantly to boosting investor confidence. The agency raised Italy’s rating, citing political stability and prudent fiscal policies that have brought the deficit/GDP ratio back below the 3% threshold. According to Moody’s, Italy’s high public debt will begin to gradually decline starting in 2027.
The improvement in the rating favors the decline in BTP yields, reducing interest expenditure on the debt, which represents the first expenditure item in the state budget.
Concrete opportunities for savers
Such a low spread level, combined with current yields, creates an attractive window for savers. The benchmark 10-year BTP yields around 3.45%, a high figure despite the interest rate cuts made by the ECB in recent months.
The advantages for investors are multiple:
- a particularly advantageous risk/return ratio, being able to count on a consistent and regular coupon flow;
- the profit opportunities are concrete and tangible, with the possibility of reselling the stock in the future at a higher price;
- in a context characterized by marked uncertainty on the stock markets, Italian government bonds represent an anchor of safety.
The appreciation of foreign investors
According to the Bank of Italy’s semi-annual Financial Stability Report, the share of Italian government bonds held by foreign investors continued to grow in the first half of 2025. Placement activity by the Treasury continued regularly, with increasing quantities among medium and long-term securities. This is also thanks to the maxi retail issues such as the BTP Italia and the BTP Valore.
Liquidity conditions on the secondary market for Italian government securities remained relaxed, with trading volumes recording new highs. The average cost of the securities is 2.84%, while the premium on credit default swaps has reached the lowest level of the last 16 years.
