Government plans for the next budget law they frighten international investors, who have sold a large number of Italian government bonds on the secondary market in recent months. According to some estimates by the European Central Bank reported by the Financial Times, between May and June the sales of BTPs, shares and bonds of Italian companies have reached altitude 72 billion euros (34 in May and 38 in June). A historical record. Even if government bonds amounted to “only” 33 billion in June and just over 23 in May. And the volatility of Italian securities risks remaining high at least until October, when the economic package will be presented.
So far, Italian banks have tried to at least partially offset the game. In the second quarter of 2018, the lenders of our country bought around forty billion BTPs. In this case, it is a record since the 2012 debt crisis.
All of this, of course, has an impact on the yield on public bonds and on the spread. This morning the yield differential between ten-year BTPs and Bunds with the same maturity is around 270 basis points, with the interest rate of Italian bonds equal to 3,06%.
Last spring, when the Gentiloni government launched the latest Economic and Financial Document, the spread hovered around 120 basis points. Less than half of today. This surge will cost dearly: according to the calculations of the Parliamentary Budget Office, 100 points of difference more can be worth between 3,6 and 4,5 billion additional interest expense.
The final bill will be decided by the trend of the public debt in the coming months, closely linked to the fate of the budget law. Foreign investors – who own almost a third of our debt, around 700 billion out of 2.300 – are waiting to get an idea of a possible increase in the deficit-GDP ratio to finance flat tax and basic income. But the report card provided by the rating agencies will also weigh heavily on their judgment.
