The spread between Italian BTPs and German Bunds continues to grow at a rate of one point per day. At the start of April 29, the differential reached 83 basis points, driven by US uncertainties over Iran’s proposed agreement to reopen the Strait of Hormuz, while at the same time postponing nuclear negotiations to a future to be defined.
The auction of 3 and 6 month BOTs ended yesterday, April 28th, with good demand for both products. The Treasury collected all 4.5 billion euros of government bonds put on the market, with yields between 2.16% and 2.33%. The April auctions with medium and long-term BTPs end today.
Spread still increasing, yields close to 4%
The constant rise in the spread between Italian BTPs and German Bunds continues. The spread reached 83 basis points, once again confirming the trajectory undertaken this week. A slow increase in the distance between the yields of the two 10-year benchmark bonds, which confirms a particularly sensitive moment for Italian public debt on the financial markets.
In the long term, the change remains positive. Compared to last year, the spread is 24% lower and even in the last month there was a drop of 14%. The data starts to become negative if you analyze it over the medium term. In the last six months the spread has increased by almost 7% and since the beginning of the year by more than 27%.
The yields on 10-year BTPs came close to 3.90% at the opening of April 29th, with a significant increase compared to yesterday. International tensions and negative economic data continue to push this metric. Discussions about a possible budget deviation in contrast with European indications do not help.
Stable spreads in Europe
Even though the yields of all European government bonds are rising, Italian ones are growing faster than the other large EU countries. The Spanish Bonos have in fact maintained a differential of 46 points, in line with that of the beginning of the week, even at the start of April 29th.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.06% | – |
| Italian BTPs | 3.89% | 83 |
| French Oats | 3.71% | 65 |
| Spanish bonos | 3.52% | 46 |
Similarly, after a slight peak yesterday, the French spread also returned to 65 basis points. This demonstrates a slight concern on the part of the markets regarding Italian public debt, which is seen differently than those of other large European countries.
Positive BOT auction, medium and long term BTPs today
The auction of the Bots ended yesterday, from which the State obtained the expected 4.5 billion euros. The two financial products offered had slightly different returns:
- 3-month Bots will yield approximately 2.16%;
- the 6-month Bots will yield around 2.34%.
Demand remained positive, with a supply ratio between 1.60 and 1.75. Below 1.50 we would start to talk about weak demand. The last auction of April will be held today, with medium and long-term BTPs. Will be offered:
- up to 4 billion in 5-year BTPs with a 3.15% coupon;
- up to 1.5 billion 15-year BTPs with a 3.35% coupon;
- up to 3.5 billion CCTeu with an annualized rate of 3.23%.
The next auctions will be held at the beginning of May:
- the Bots auction on May 7th;
- the auction of medium and long-term BTPs will take place on 8 May.
