Goldman Sachs promotes i Italian btpexplaining the reasons to maintain a “constructive approach” on the tricolor government bonds, on the basis of three positive factors (PNRR, real rates, political stability) and an element of attention (low productivity). This is what emerges from a study signed by the analyst Filippo Taddeientitled “European Daily: Italy—Three rensions to be constructive about italian debt in 2025“.
The current situation: spread to the minimum for 5 years
The spreads on Italian government bonds have behaved well for a certain period and are gradually narrowing since the autumn of 2022. The current BTP-Bund spread at 10 years – explains Goldman Sachs expert – is the lower than the last five years.
Today the BTP-Bund spread dates back to 99 points, an important signal of the credibility of our public finances, after touching a minimum of 94 points in recent days.
Some market operators – highlights the business bank – believe that this unlikely favorable price policy that lasts, since an increase in the debt/GDP ratio is expected, real rates on government bonds are increasing and the expenditure for defense is intended to grow by 1% of GDP by 2027 due to European geopolitical challenges. Considerations that Goldman should be confused.
Three factors of improvement
Specifically, Goldman Sachs has identified Three support elements at the descent of the spread and the major attractiveness of our BTPs. Among the three elements, the support for the funding deriving from the PNRR; the content increase in real rates, which are confirmed about 100 points below the pre-pandic average; The political stability guaranteed by the Meloni government.
- PNRR – The support of the Recovery Fund is destined to continue until 2026, providing a tax space of about 1.5% of the GDP per year. The Italian tax balance is improving to the fastest pace among the top four European economies (Germany, France, Italy, Spain), reaching the gap lower Compared to the average of the euro area Since 2016. The government – underlines – reiterated its own commitment to maintain this trend. For this reason Goldman Sachs provides that the Italian tax balance better better.
- Real rates below pre-pandemic media- Real rates are increasing due to disinflation, US duties and the increase in long -term yields. However, i Italian real rates they are approximately 100 base points lower than the average of the period prior to the pandemic. Also considering the greatest tax space necessary for theIncrease in defense expensesGoldman believes it will be absorbed by the EU debt issue. Although this will involve an increase in deficit and debt, The business bank believes “Unlikely” that BTP emissions grow And the average deadline should extend.
- Political stability and popularity of the government – All the episodes that have led to an enlargement of the spreads in the last 10 years, with a single exception, – underlines Goldman – have been caused by political instability. Currently, This risk seems low in Italy. According to the surveys, the current government is The only Italian executive of the last 20 years to have earned in popularity in the 30 months following his settlement. Therefore, the US business bank provides that This condition will remain at least until next yeargiven the absence of relevant political catalysts.
And an element of attention
At the conclusion of a very positive opinion of the American Bank of Affairs, the Taddei analyst also mentions A point of attention: low productivity which has always characterized our labor market. Although the temporary favorable winds will probably support the prospects of Italian debt this year – he underlines – Italy is the only one of the four major Economies of the Eurozone to have recorded one negative productivity growth In the last two years, despite the broad tax support for the investments offered by the Recovery Fund. A lasting improvement of the Italian debt – it is stated – will require structural progress of the economy.
