April 29, 2020 / 6:38 AM / a month ago

Italian bond yields rise after Fitch downgrade

LONDON, April 29 (Reuters) - Italy’s government bond yields rose on Wednesday after ratings agency Fitch downgraded the country’s credit rating to one notch above junk.

In an off-schedule move, ratings agency Fitch cut Italy’s credit rating to “BBB-minus” on Tuesday, citing the impact of the coronavirus pandemic on the heavily-indebted sovereign’s economy.

Bond yields rose with the two-year yield rising as much as 12 basis points. It was last up 10 bps at 0.73%. The 10-year yield rose as much as 10 bps to 1.83%. It was last up 8 bps at 1.82%.

The closely watched gap between Italy and Germany’s 10-year yields - effectively the risk premium the latter pays on its debt - widened 9 bps to 228 bps, erasing all the tightening it showed since last Friday’s S&P ratings review, where Italy’s credit rating was held at BBB. (Reporting by Yoruk Bahceli; Editing by Saikat Chatterjee)

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