The spread between Italian BTPs and German Bunds underwent an unexpected surge yesterday. The spread reached 96 basis points at the opening on September 24, recording an increase of 8 basis points in 24 hours, the likes of which had not been seen for months.
Yields also reached record levels, 4.51%, the highest since November 2023. A difficult situation for the Treasury, given that the end-of-September government bond auctions begin tomorrow.
Spreads and returns are growing, but it is not Italy’s “fault”.
The data on spreads and yields at the opening on September 24th could suggest a sudden loss of investor confidence in Italian public debt. Even if, historically, the differential remains far from historical highs, 96 basis points are almost equal to the 2026 record and the second highest level since November 2023. In reality, however, it is the international situation that has deteriorated.
Oil, Italy remains more exposed
It is the energy markets that determine the pressure on Italian public debt. Oil, in particular Brent, remained above 100 dollars a barrel and this could compromise the growth of our country and, in general, that of Europe. An assessment that does not seem to take particular account of yesterday’s OECD data, which revised Italian GDP growth up to +0.9%.
The fact remains that Italy is among the countries most exposed to this crisis. It has one of the highest motorisation rates in Europe and one of the oldest and least electrified car fleets. This means that any increase in oil prices has a much more significant impact on the Italian economy than the European average. The markets are aware of this situation and therefore do not trust the resilience of our country’s economy in the face of the difficulties that the oil crisis could cause.
The spread could have been worse: the case of France
The rest of the European countries demonstrate that the jump in the spread opening on September 24th does not depend on the Italian situation. Even Spain, for months the most stable of the large European countries in terms of government bonds, reached a differential of almost 50 basis points.
| Government bonds | Returns | Spreads |
|---|---|---|
| German Bunds | 3.55% | – |
| Italian BTPs | 4.51% | 96 |
| French Oats | 4.67% | 112 |
| Spanish bonos | 4.04% | 49 |
However, it is France that indicates how the Italian situation is less worse than expected. The spread between Oat and Bund jumped to 112 basis points. What worries investors is the Paris deficit, which risks getting out of control, an increasingly high debt, but also an extremely uncertain political situation.
A fragmented electorate could allow several candidates, including the far-right Marine Le Pen, to win the next presidential elections and drastically reduce France’s importance in the EU, compromising its leadership role.
September government bond auctions
The data on the spread and yields are not good news for the Treasury, given that they arrive on the eve of the first auctions at the end of September, those of the BOTs. The increase in yields will entail greater costs for the State but also represents an opportunity for investors. The auctions will be held:
- the auction of Btp Short and Btp€i on 24 September;
- the Bots auction on September 25th;
- the auction of medium and long-term bonds will take place on 29 September.
