Italian government bond yields remained essentially stable after the first auction in May. At the start of May 13, BTPs recorded a spread of 77 basis points with Bunds, down by two basis points, while the spreads of the other large European countries also reduced slightly.
The first auction of May government bonds, that of BOTs, ended yesterday with the placement of 10 billion euros at a yield which, depending on the financial product, varies between 2% and 2.7%. The BTP auction will end today, with three different medium and long-term products.
Btp-Bund spread slightly decreasing to 77 basis points
After yesterday’s peak, which brought the spread back close to 80 basis points, BTPs saw a slight drop in yields, which brought them back closer to last week’s closing results, at least as far as the distance from Bunds is concerned. The spread narrowed at the opening to 77 basis points, with yields falling by one hundredth of a point, to 3.86%.
At the same time, German government bonds saw their yields increase by one hundredth of a point, reaching 3.09% and therefore leading to a reduction of two points in the spread. The main driver of changes in government bond markets continues to be the war in Iran, which yesterday experienced another day of stalemate between mutual threats from Tehran and Washington.
The results of European spreads
Even in the rest of Europe the dynamics of the government bond markets were substantially the same as in Italy. In Spain, Bonos kept their yields stable, benefiting from the increase in Bund yields and therefore reducing, albeit slightly, the spread.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.09% | – |
| Italian BTPs | 3.86% | 77 |
| French Oats | 3.72% | 63 |
| Spanish Bonos | 3.52% | 43 |
Similarly, French OATs have reduced their distance from their German counterparts while maintaining the same yields. Paris bonds are 63 basis points away from Bunds, with yields of 3.72%.
The results of the Bot auctions on May 12th
Yesterday the Treasury placed 10 billion euros in BOTs, short-term government bonds, on the market. There were two different products up for auction:
- 8.5 billion euros in annual Bots, Isin code IT0005709289, expiring in May 2027;
- 1.5 billion euros in annual BOTs with a residual life of two months, ISIN code IT0005660029, expiring in July 2026.
Demand for these securities was excellent for the shorter-dated ones, while it fell below the 1.50 threshold, which usually indicates a healthy demand for a Treasury bill, for the former. Today, however, the following will go up for auction:
- up to 3 billion euros in 3-year BTPs, Isin code IT0005704868, with maturity in March 2029 and coupon of 2.40%;
- up to 3.25 billion euros in 7-year BTPs, Isin code IT0005689960, with maturity in June 2033 and 3.30% coupon;
- up to 1.25 billion euros in 20-year BTPs, Isin code IT0005321325, with maturity in September 2038 and 2.95% coupon.
The other auctions in May will be:
- on May 26th, auction of Short Term BTPs;
- May 27th, Bot auction;
- on May 28th, auction of medium-long term BTPs.
