Two-thirds of the Btp 7, launched on Wednesday with great success by the Treasury, were subscribed by international investors. There is also a strong presence on 3 and 15-year BTPs, coveted by operators looking for good returns. Meanwhile, after the downgrading of its rating, Telecom Italia is attracting the interest of managers specializing in the high yield sector in which, despite itself, the former incumbent has become the most important stock. But let's not delude ourselves: the Italian debt problems are so serious that the recovery of prices, see the spread, is limited. This is the opinion of Claudia Segre, the General Secretary of Assiom Forex, who can boast a long operational experience on the front of the fixed income and surroundings.
Why did managers discover Italy and Spain?
“In reality, the trend has been well defined for months. Despite declarations of various kinds by the major international managers, the desire to diversify investments and increase profitability has been evident for some time. It is a widespread phenomenon, which concerns all the big players, and which will benefit from the relative stabilization of the debt of the big economies, as emerges from the IMF summit”.
The summer was turbulent for the debt market. Yet, big surprise, BTPs and Bonos are among the least volatile stocks. How is it possible?
“Beginning in June, an exodus of US government bonds was kicked off from China and Japan in June after Bernanke's first hint of a reduction in the bond purchase plan. Back then there were net sales of US bonds for 40,8 billion US dollars out of the total 67 billion of sales made by foreign investors, an amount that was seen, and for quite other reasons, only in August 2007. Even then the rally of government bonds of peripheral countries, such as Italy and Spain, could have been foreseen. Also because, as I wrote in July, Asian investors are careful to keep the euro in the 1,28-1,35 range and to dominate trading on government bonds, partly also as a reflection of their own sovereign wealth funds always looking for safe havens and finally profitable. In the meantime, the movement of the German spread also benefited the spreads of the peripheral EU countries, primarily the Italian one, which fell to the 220-250 range, pace of the Italian treasury. After having overcome the crux of government stability, the trend has resumed".
With what goal? Can we hypothesize, as is done in the stability law, a gap close to 100 points by 2016?
“The moment is positive. Barring negative surprises, it is not excluded that we can aim to go down to 200 basic points. I wouldn't go any further. It is enough to record the difficulty in collecting, between savings and resignations, 11,5 billion in the stability law on a budget that is around 900 billion to justify caution. Let us not forget that Spain has privatized assets worth 15 billion in recent months. And, even more, that the fiscal compact will require even more demanding financial manoeuvres”.
In the meantime, however, let us enjoy the benefits of a favorable climate. How much will Janet Yellen's nomination count?
“The markets liked the appointment because it marks continuity with Bernanke's management. On the contrary, it is the guarantee that the Tapering in tight times or in any case with strong moves. Indeed, judging by the latest indications arriving from the US, there will be no talk of reducing QE before the Fed meeting in March 2014. In this case, the maneuver could only be completed in mid-2015. In short, the signals have strengthened. Of course, however, first we need to see how the comparison on the debt ceiling".
We have seen that there is room for lowering the cost of Italian debt financing, even if it is not infinite. But what effect can it have on corporate debt?
“Already there is growth in activity on high yield or converted bonds. The most significant case concerns Telecom Italia, after its demotion on the high yield day o fallen angels”.
In what sense?
“Telecom Italia's transition to high yield has had and will have consequences both for the fallen angels market and for the company's issues. Funds specializing in fallen angels are very active in this phase of the market, which seeks out high-yield securities. Telecom Italia, after the downgrading by Moody's, has become by far the most important European company to be included in a high yield basket in terms of size. For example, it is calculated that it may represent 7,3% of the Barclays Pan Euro HY ex-Fin Index basket”.
One could say, in football jargon, that TI has become the strongest team in Serie B. It's not the best, but it could be an opportunity to start over. Couldn't that also apply to Italy, in the event of the loss of the last A, what do we have left?
“Alas no. The situation of a private company which can, even in the short term, initiate a profound restructuring is one thing. Another thing, unfortunately, is the sovereign risk”.
