BTPs sell like hot cakes abroad: rating agencies “effect”.

The syndicated placement of the new benchmark 7-year BTP, cexpiring November 15, 2031, and the reopening of the 30-year BTP, with maturity October 1, 2054, saw some participationand “extraordinarily diverse” (over 30 countries on the 7-year BTP and more than 35 on the 30-year bond), with a “great interest” by foreign investors. This was stated by the Ministry of Economy and Finance, disclosing the details of the operation.

BTP, boom abroad

The total amount issued was equal to 13 billion euros for an overall demand that exceeded 200 billion euros, of which approximately 99 billion for the new title at 7 years old and around 107 billion for the 30 year BTP. Over 300 investors for the 7-year BTP participated in the operation, while just under 400 took part in the reopening of the 30-year BTP.

Fund managers have signed up to the 53.6% of the 30-year BTP issue while for the 7-year bond their participation was 46.9%. The banks subscribed 30% of the seven-year bond and 26.7% of the thirty-year bond. Investors with a long-term investment horizon subscribed a significant portion, equal to 20.4% for the 7-year BTP (of which 9.6% was assigned to pension funds and insurance companies and 10.8% to central banks and government institutions) and 14.9% for the 30-year bond (of which 10.7% to pension funds and insurance companies and 4.2% to central banks and government institutions). Hedge funds were allocated approximately 3% for the 30-year bond and 2.7% in the 7-year bond, while a residual portion was subscribed by other investors.

MEF numbers

The share allocated to foreign investors was equal to 81.1% for title a 7-year and 80.9% for the 30-year bond, while domestic investors subscribed 18.9% and 19.1% respectively. Among foreign investors, the largest share of the placement was subscribed in Europe, in particular by the United Kingdom (21% over 7 years and 22.7% over 30 years), France (8.0% and 12.2% respectively ), Germany, Austria and Switzerland (7.4% and 4.6% respectively), Iberian Peninsula (11.1% and 8.1% respectively), Scandinavian countries (7.5% and 9.4% respectively), Benelux (2.4% and 0.9% respectively) and from other European countries (1.5% over 7 years and 1.8% over 30 years). The share allocated to North American investors is significant, equal to 8.8% and 16.1% on 7 and 30 year bonds respectively. Asian investors subscribed 9.1% for the 7-year bond and 1.5% on the longer-dated bond, while the residual portion of the two placements was allocated to other non-European investors.

Rating agency effect

An enthusiasm driven by the fact that in recent days Italy it passed the test of S&P and Fitch unscathed. Both agencies confirm the BBB rating, and Fitch raises the outlook from stable to positive, speaking of a “credible fiscal plan” and a “stable political situation”.

“The ratings of the rating agencies are the result of the responsible action of this government which translates into credibility for Italy”, said on the occasion Minister of Economy Giancarlo Giorgetti commenting on the ratings of S&P and Fitch.