Btp-Bund spread at 81 points, today the Short Term Btp auctions

The spread between Italian BTPs and German Bunds remained stable at 81 basis points after the collapse that occurred over the weekend. Yields also reduced their volatility, however falling by three hundredths of a percentage point, in parallel with what was recorded by German government bonds.

Government bond auctions will begin today, the last ones in July. In three days the Treasury will issue Short Term BTPs, BTP€i, BOTs and medium and long term securities. There is the risk of complex issues, given that the yields of benchmark securities have risen significantly.

Spread stable, yields still falling

With the Middle East stuck in uncertainty, government bond markets remain stable. On the one hand, Iran and its allies have launched a wave of attacks across the region, from Iraq to Jordan to Saudi Arabia. On the other hand, US President Donald Trump has opened up dialogue with Tehran. The consequence is that investors wait and stocks remain stable.

81 point spread between BTPs and German Bunds

Without any particular shocks, the spread was able to achieve a stable transition after days of continuous uncertainties. The spread between 10-year BTPs and Bunds remained unchanged at the opening levels on Monday 27 July. 81 basis points, high for the recent average, but definitely below the peaks of the end of last week.

Yields continue their decline

This zero change in the spread resulted from a parallel decline in the yields of Italian and German benchmark securities. Both saw their interest rates drop by three hundredths of a percentage point, with BTPs reaching 3.92% and Bunds reaching 3.11%.

Government bond auctions

The end-of-July auctions of government bonds begin today. The first will be those of Short Term Btp and Btp€i, with three different products:

• a Short Term BTP, Isin code IT0005692410, maturing on 28 February 2028 and coupon of 2.20%;
• a Short Term BTP (formerly 7-year BTP), Isin code IT0005445306, with maturity on 15 July 2028 and coupon of 0.50%;
• a 10-year BTP€i, Isin code to be assigned, with maturity on 15 February 2037 and coupon of 2.00%.

The BOT auctions will follow, tomorrow 29 July, which will make 6-month BOTs available for a value of 7.5 billion euros. Finally, auctions of medium and long-term bonds will be held, which will lead to the issuance of:

• a 5-year BTP, Isin code IT0005707614, maturing on 1 June 2031 and coupon of 3.15%;
• a 10-year BTP, Isin code IT0005706285, maturing on 1 July 2036 and coupon of 3.80%;
• a 15-year BTP, Isin code IT0005402117, maturing on 1 March 2036 and coupon of 1.45%;
• a CCTeu, Isin code IT0005707689, expiring on 15 April 2036 and an annualized coupon rate of 3.237%.

The rest of Europe is also stable

Spreads essentially stable also in the rest of Europe. Both the Spanish Bonos and the French Oat showed a minimal upward variation, of one point, but yields continued to fall, just less quickly than the German ones.