In the aftermath of the announcement of Prime Minister Silvio Berlusconi's forthcoming resignation, the spread went crazy and the stock markets plummeted. While Colle warns of a quick decision, the markets that initially welcomed the prospect of the change in leadership are now realizing that they are faced with an impasse that is difficult to resolve. Already because, if by definition they are always right, this time the markets have not taken into account the Italian variable.
Mario Spreafico, investment manager at Schroders Italia, says: “I think the markets haven't come to terms with what Berlusconi's exit meant. A part of finance has tried to condition politics and now that he has obtained the result of his resignation he doesn't know what will happen. Because he made the calculations on an Anglo-Saxon and not an Italian type of vision, we now find ourselves in a difficult impasse situation ”. For Spreafico, the desirable scenario is the approval of the maxi-amendment on the stability bill to then evaluate a government of broad understandings that has the points established by the European Union as a priority. The last option is that of elections which should only come into play later, giving the mandate to a temporary government by March. “I believe that the government's situation – continues Spreafico – is taken as an alibi, the problem originally arises from the serious fears highlighted by S&P at the end of May and then from the result of the referendum, especially that of water, which gave the message of a hypotheses of possible liberalizations disappear. This has led Italy to be a scapegoat, with an important role of speculation by a part of non-Italian finance that tries to direct politics”.
However, some technical factors also weigh on the reaction of the spreads. Like the decision of the clearing house Clearnet to increase the haircut for BTPs by 5 points. Or like the EBA's decision to force the mark to market also on government bonds held to maturity. "There is much talk of ten-year BTPs, but the rise in yields has also greatly affected short-term two-year bonds with the inversion of the yield curve, and this short-term debt is 30% held by bank treasuries" , explains Carlo Aloisio, broker of Unicredit. Bnp Paribas has cut the amount of Italian treasury bonds in its portfolio by 40%, with sales of 8,3 billion euros. Added to all this, recalls Aloisio, is the Greek front with the news of the impasse on a change of leadership which now seemed to be in the pipeline with the name of Lucas Papademos but which encountered problems with both parties at the last moment : “The market fears that an impasse of this type will arise in Italy too – says Aloisio – today it is necessary to roll up one's sleeves and create a transversal majority that will go on to approve the points of the European maneuver, commitments that have been made at the European and they are essential. A government with a super partes name like Monti might like the market, the problem is finding a majority that supports it ”.
And after months of announcements, negotiations, requests and reviews, now even the extra time is coming to an end. Gabriele Vedani, director general of Forex Capital Markets says: “That the time for words is largely over is demonstrated by the trend that the markets have on a daily basis. Now the facts are needed. From an operator's point of view, a strong solution is needed and one that is achieved in the short term. BTPs at these levels are further damage from a financial and economic point of view. And this happens on the eve of one of the heaviest weeks ever for Treasury placements, which must place 6,1 billion securities. Between now and the end of the month, the placements to be completed amount to 16 billion".
Crucial for operators remain the reactions of large institutional investors which could reveal surprises. Aloisio of Unicredit notes: “ The market is now waiting for the signals that can come from big US investors. The head of Blackrock Italia said that the Btp rates do not reflect the fundamentals and the Goldman Sachs newsletter is now awaited, which could give a positive boost to the Btp. If trust arrives from the big operators, the situation can change at any moment”.
