The spread between BTPs and Bunds and the yields remained substantially stable during the first minutes of the opening on July 24th compared to the data recorded yesterday. The spread has not moved from the 85 basis points reached yesterday, still a record for the last few months. Likewise, yields have not moved, remaining at record levels, seen only a few times in recent years.
The Treasury has also published the annual coupons of the BTPs at auction on July 27, with the Short Term BTPs having a base interest of 2.20%. However, their yield will only be established next week, also in light of the price that investors will be willing to pay, also given the situation on the markets.
Stable spread, but record returns
No significant change in the spread between Italian BTPs and German Bunds at the opening on 24 July. The spread remained at 85 basis points, stabilizing after yesterday’s increase. A closing of the week which would still determine one of the highest levels of spread in recent months, even if not yet at the 97 points reached in March.
Yields also continue to remain high. Yesterday’s 4.04% was confirmed, transforming a peak that has not been seen except on a handful of occasions in the last two years into a possible new normal. Good news for investors, but not for the Treasury, which is preparing for a difficult week of auctions.
Next week’s auctions, with yields above 4%
The end-of-month BOT and BTP auctions will open on Tuesday 28 July. We will start with Short Term Btp and Btp€i, the details of which were published in the early hours of today. The products offered will be:
- A Bpt Short Term in its 13th tranche, maturing on February 28, 2028, with a coupon of 2.20%;
- A 7-year BTP in its twelfth tranche, maturing in July 2028, with a coupon of 0.50%;
- A 10-year Btp€ia in its first tranche, maturing in February 2037 with a 2.00% coupon.
As can be seen, the coupons are very far from market returns. In some cases it is a question of duration (even the 7-year BTP actually expires in two), while for the BTP€ii the returns are indexed to Eurozone inflation. In any case, the Treasury risks facing very low bids, which could lead to yields approaching market rates.
The following auctions will be:
- Bot auction on July 29th;
- auction of medium and long-term bonds on 30 July.
How other European spreads are doing
As with Italy, Spain is also recording substantial stability in the yields of Bonos, its benchmark securities. Unlike our country, however, the spread is much closer to the recent average, 47 basis points. However, yields settled at high values, at 3.66%.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.19% | – |
| Italian BTPs | 4.04% | 85 |
| French Oats | 4.01% | 82 |
| Spanish bonos | 3.66% | 47 |
The French situation, however, is more unstable. The Oat spread increased by two basis points in the morning, reaching 82, while yields exceeded 4%.
