MILAN May 12 Italy's Treasury expects good
demand for a new BTP Italia inflation-linked bond it will offer
to retail investors next week and has already met 42-43 percent
of its gross funding needs for this year, the head of debt
management told Reuters.
Italy will start selling a new BTP Italia bond maturing May
22, 2023 on Monday. The bond pays a real coupon
of at least 0.45 percent plus domestic inflation.
The last such issue, which had an eight-year maturity,
raised 5.2 billion euros.
"I expect more interest compared with last time ...
inflation is recovering and yields are no longer 'underground'
like last year," Maria Cannata told Reuters in an interview.
"Barring explosive demand, we are planning to let the first
phase of the offering, reserved to retail investors, run for the
full three days, with no early closure."
Italy introduced the BTP Italia bonds at the height of the
euro zone debt crisis to tap large private wealth at home in the
face of scant foreign demand for its debt.
Paying a generous premium over the Italian inflation rate,
the bonds have also proved a success with institutional buyers,
leading to record-sized issues and prompting the Treasury to
limit the amount sold to professional investors.
"Depending on the amount sold to the public we reserve the
right, as usual, to limit how much we allocate to institutional
buyers," Cannata said.
A fall in government bond yields driven by the European
Central Bank's ultra-expansionary policies has led ordinary
Italians to cut traditionally high holdings of domestic bonds.
Cannata said there were no signs of a pick-up in retail
interest in standard Italian government bonds.
Another important group of buyers, the country's banks, are
also reducing their holdings due to regulatory concerns. Cannata
said the Treasury could rely on asset managers and insurers,
which have now come to hold around one quarter of Italian bonds.
Italy's public debt is the world's third-largest after the
United States and Japan. As a proportion of domestic output it
is second only to Greece's in the euro zone.
Italy's large debt pile and feeble economic growth make the
euro zone's third-largest economy a focus of investor concerns
over a possible break-up of the bloc, as the ECB prepares to
scale down its monthly purchases of government bonds.
"There is great uncertainty in Europe and analysts often
feed alarms of various nature, but (ECB President Mario) Draghi
is ready with his foot on the brake when markets start
speculating on when the quantitative easing programme might
end," Cannata said.
Based on Reuters calculations, Italy's gross issuance so far
this year totals around 185 billion euros.
(Writing by Valentina Za; Editing by Catherine Evans)