Continue theresurge in yields on Italian bonds with the consequent galloping of the spread between Btp and Bund. The level of the latter is now stable above 300 basis points – the differential currently stands at 314 points – and forecasts for the future do not seem to envisage a return to what seemed to have become normal until 4 March.
Indeed, in just 8 months, the gap between Italian and German 131-year terms has more than doubled, rising from 28 points on February 314 to XNUMX today. It's no better on the front yields, increased on 10-year bonds from 1,98 to 3,54%.
SPREADS AND RETURNS: WHAT THEY ARE
The spread, as we have explained so many times, is the difference between the yield on ten-year bonds of a country in the Eurozone and that on German bunds, unanimously considered the safest government bonds in the Eurozone. The more the gap with the benchmark widens, the more the country is considered at risk.
In fact, with the increase in yields, the danger that a State, upon maturity of the security, will not be able to repay the coupons on the interest and therefore to repay the money it has received on loan from the markets, also becomes higher. The reason is obvious: if yields rise, the amount that a given country must repay to creditors also rises.
EUROPEAN GOVERNMENT BONDS: THE RANKING OF YIELDS
The volatility that has poured into the Italian market since last March 4, i.e. since the day of the elections, in addition to hitting the stock market heavily – Piazza Affari has lost almost 17% since February 28 – led to a strong growth in yields on our sovereign debt both in the short and long term. Taking into consideration only the 10-year BTP, the rate rose by over 1 and a half percentage points, making our yields the highest after those of Greece.
The rate on the Greek government bond is currently traveling at 4,3%, positioning itself in last place in the Eurozone ranking. Worse than us does even theHungary, which however does not belong to the euro area, with a yield of 3,8%. Follows the ITalia with a 3,5-year rate of XNUMX%. Then the void.
Both the first two economies of the euro area, namely France and Germany, and countries traditionally considered closest to us in terms of history and economic vicissitudes, such as Spain and Portugal, have yields on government bonds that are much lower than ours. Speaking in percentages:
- Portugal: 1,98%,
- Spain: 1,62%,
- France: 0,78%,
- Germany: 0,41%.
THE RANKING OF SPREADS
The gap created with the yields of the other Eurozone countries has repercussions on the spread with the German Bund. Also in this case, at the bottom of the ranking we find Greece, with a differential with respect to the German ten-year bonds of 389 basis points.
Italian bonds stand at 314 basis points away from those of Berlin, while the spread between Portuguese 157-year OTs and the Bund is equal to 121 points. Spanish bonos distance themselves from the benchmark by XNUMX points e the spread between French and German XNUMX-year bonds is almost nil: 37 basis points.
THE SPREAD BETWEEN ITALY AND OTHER COUNTRIES
Today it is difficult to ignore the reality: Italy is light years away from the two most solid countries in the Eurozonei.e. France and Germany. Compared to Spain and Portugal, the two peripheral economies that have suffered the blows of the crisis like and more than us since 2011, the gap is getting wider day by day. Italy, on the other hand, is ever closer to Greece than until yesterday it was subjected to the diktats of the Troika in order to avoid a default that many assumed was virtually certain.
Not surprisingly, it is spread between 10-year BTPs and the corresponding Greek ones today it is equal to 76 basis points (after having reached a low of 69 at the opening), four times less than what separates us from Berlin. To find another level below 100 basis points, we need to go back to 2009. In January 2018, for example, the distance was 197 points.
And compared to the others? The Spanish bonos they distance us by 192 basis points, a level never reached even during the 2011 crisis, when the spread reached 575 points on the bund – the Portuguese OTs of 156, those French by 276 points.
And the best, perhaps, is yet to come. Italy will still have to face many important appointments, first of all the opinion of Standard & Poor's which should arrive on 26 October and which could lead to a new downgrading after the one established by Moody's. Not to mention the Maneuver: after the rejection of the European Union our country has three weeks to correct the shot. However, the main representatives of the Government seem to be intent on going straight, thus making the launch by Brussels of an unprecedented infringement procedure for excessive debt inevitable. Volatility on the Italian market therefore seems assured.
