The spread between Italian BTPs and German Bunds fell at the opening on 23 September, thanks to a clear reduction in yields, which reached 4.32%. The spread contracted by one point, moving to 88 basis points and moving away from the psychological threshold of 90 points, which it came close to in recent days.
The markets reacted positively to the data published by Istat yesterday on the Italian economy, despite having certified that our country will not exit the European excessive deficit procedure early.
Because the spread and yields are falling despite the Istat data
The opening of the financial markets has rewarded Italian BTPs. A drop of 5 cents of a percentage point in yields compared to Tuesday’s opening certified growing investor confidence in Italian securities, even more than that shown for their German counterparts. The spread, in fact, reduced by one point, going to 88.
Istat data are positive
An apparently contradictory reaction, given that yesterday Istat released data which certified that Italy will not exit the European procedure for excessive deficit. Deep disappointment emerged from the Government, with Minister Salvini calling for a budget shift, a measure that would weaken the BTPs by creating new debt.
In reality, the reaction of the data highlights that the Government’s expectations were oversized compared to the markets’ expectations. Exiting the procedure as early as 2026 was an advance compared to the European roadmap, which did not see Italy returning below 3% deficit before 2027. The data confirmed the executive’s commitment to keeping accounts in order and therefore did not penalize government bonds on international markets.
The spread of the other large European countries
Yields also fell sharply in the rest of Europe. In addition to Bunds, which achieved yields of 3.44%, Spanish Bonos also showed improvements, with a spread of 45 basis points which generated interest on ten-year bonds of 3.89%.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.44% | – |
| Italian BTPs | 4.32% | 88 |
| French Oats | 4.47% | 103 |
| Spanish bonos | 3.89% | 45 |
However, France is unable to improve its position. OATs remain over 100 basis points behind Bunds, with yields still very close to 4.50%.
Green BTPs snapped up, offers of 110 billion euros
The Green BTPs obtained a very high offer during the syndicated issue entrusted to the large banks in recent days. Applications exceeded 110 billion euros and the yields came very close to those of 10-year BTPs, despite the fact that it is a 12-year security. Between coupon and sales price, the BTP Green yields 4.40%.
This syndicated issue will be followed by regular auctions at the end of September, which will be held:
- on 24 September, the auction of Btp Short and Btp€i;
- September 25th, the Bots auction;
- on September 29th, the auction of medium and long-term bonds.
