July 9, 2019 / 9:19 AM / 2 months ago

Italy cashes on improved market confidence to sell more 50-year debt

MILAN, July 9 (Reuters) - Italy began the sale on Tuesday of a new tranche of the 50-year bond it launched in 2016, taking advantage of improved market sentiment after Rome avoided EU disciplinary action and of investor bets that euro zone monetary policy will remain dovish.

Initial price guidance for the top-up of the 2.80% March 2067 BTP bond was set at around 13 basis points over the yield of the 3.85% September 2049 BTP, and the new tranche is expected to be of benchmark size, according to Refinitiv’s IFR service.

Citigroup, Deutsche Bank, Goldman Sachs and UniCredit are managing the transaction via syndicate, the Treasury said on Monday. The Treasury does not give a guide size for syndicated bond issues.

Last week, the Italian government persuaded the European Commission that new budget measures it had submitted would help bring its growing debt into line with EU fiscal rules.

Avoiding that clash with Brussels and expectations that the European Central Bank will retain its dovish stance under its incoming president Christine Lagarde have helped Italian government bond yields fall to their lowest since 2016.

Tuesday’s sale is the second syndicated deal for Italy in less than a month, after Rome sold 6 billion euros ($6.7 billion) of a new 20-year government bond in June, raising orders worth more than 23.5 billion euros.

Italian banks, including UBI Banca, Mediobanca and Banca Montepaschi, also took advantage of improved financial conditions this month to raise new debt.

Launched in October 2016, the 2067 bond was originally sized at 5 billion euros and has been increased twice at regular auctions, by 750 million euros in March 2017 and by 883 million euros in January 2018.

$1 = 0.8928 euros Reporting by Giulio Piovaccari; Editing by Catherine Evans

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