New issue of Btpthe Italian State Treasury Bonds. The Ministry of Economy and Finance announced that it will make new debt securities available through the services of some investment banks. In addition to an issue of 7-year bonds, a new possibility will also be presented: the return of 30-year BTPs.
The Mef’s decision comes immediately after one of the best results on the spread since the Meloni government took office. Thanks to a number of factors, borrowing money for the Italian state is now much cheaper than it was just a few months ago.
The new BTPs of the Mef
With a statement published on its official website, the Mef has announced that it will make it available two new types of BTPsthe multi-year treasury bonds which represent one of the most common debt securities of the Italian State: “The Ministry of Economy and Finance announces that it has entrusted Deutsche Bank AG, Goldman Sachs Bank Europe SE, Intesa Sanpaolo SpA, JP Morgan SE , Morgan Stanley Europe SE and Nomura Financial Products Europe GmbH the mandate for an issue dual tranche through syndication of a new 7-year BTP benchmark expiring on 15 November 2031″, reads the first part of the ministry note.
However, there will also be something new in the panorama of Italian government bonds. The MEF, at the same time as the new issue of 7-year BTPs, also announced the “reopening for an amount not exceeding 3 billion euros (no grow) of BTP at 30 yearswith maturity 1 October 2054 and coupon 4.30% (Isin IT0005611741). The transaction will be carried out in the near future, in relation to market conditions”, concludes the press release published on the Ministry’s website.
Because it is better for the State to issue BTPs at this time
A new possibility, therefore, for those wishing to purchase Treasury bonds, with very different periods of repayment of the money by the State. Significant investments in the future of Italy, but also a deal for the State. In fact, in recent weeks, BTP yields have dropped significantly. Consequently the debt that the Government contracts in these months cost much less than in previous years.
The reasons for these results are different. The European Central Bank’s decision to lower interest rates helped. A lower cost of money has an interest-reducing impact on all loans, including those taken out by the state. The opinions of the Fitch and S&P rating agencies were added to this factor. Both confirmed the rating BBBwith Fitch also upgrading the outlook from stable to positive. This suggests that Italy could emerge from its serious debt situation relatively quickly.
Interest on debt is a very significant part of the Italian state’s annual expenditure. They are worth on average over 4% of GDP and their reduction would free up resources for other investments. Issue Btp in periods in which the yield on government bonds is lower, it limits the cost of the debt and therefore this expense item.
