Italy launches new 30-year bond ahead of presidential vote

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Jan. 5 (Reuters) – Italy on Wednesday began selling a new 30-year bond, according to a senior manager memo viewed by Reuters, launching the first major eurozone debt sale of the year just weeks before a potentially disruptive presidential election.

The new bond, due September 1, 2052, will be valued Wednesday and is expected to offer a spread of around 8 basis points against Italy’s outstanding bond due September 2051, according to the note.

The Italian parliament is due to meet on January 24 to elect a new president.

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Prime Minister Mario Draghi last month indicated he would be ready to become head of state, and investors are trying to assess what his potential departure to a generally less powerful presidency – which could trigger a snap parliamentary election. – could mean for the Italian debt.

The arrival of former European Central Bank President Draghi as Prime Minister last February has boosted confidence in the debt-ridden Italian economy. Read more

On Wednesday, the closely watched risk premium that Italy pays for 10-year debt on top of what Germany pays was around 135 basis points, near its highest level in a year.

In addition to the political risk, the European Central Bank’s decision to end the emergency pandemic bond purchase program in March, of which Italy is a major beneficiary, also increased the premium. risk of the country.

The Italian Treasury on Tuesday hired Barclays, BNP Paribas, Deutsche Bank, Intesa Sanpaolo and JP Morgan to handle the sale.

The bond is sold through syndication, where a borrower engages banks to sell the debt directly to end investors, allowing it to increase its size and target a larger investor base.

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Report by Yoruk Bahceli in Amsterdam and Antonella Cinelli in Rome; Editing by Saikat Chatterjee and John Stonestreet

Our Standards: Thomson Reuters Trust Principles.

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