Iacovoni (Tesoro): Italy ready for new dollar bond

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PUBLIC FINANCE

The head of the public debt management department: “The 33% share in foreign investors, returned to 2018 levels”. A complementary tool to BTp is being studied to involve retail

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The «Republic of Italy» is ready to return to the global dollar bond market with one or more issues in the course of 2020. Davide Iacovoni, head of the Treasury’s directorate for public debt management, said so in a meeting with the release for the illustration of the public debt management guidelines in 2020. “There is the aim of returning to this market and recreating a curve of Italian dollar yields” said Iacovoni adding that “there are margins to complete the curve “and that the Treasury is” considering whether to make a multi-tranche issue or a single issue “on maturities not yet covered.

The average life of public debt
Iacovoni explained that in 2019 the average life of the Italian public debt stood at 6.87 years and that the goal for 2020 is to “consolidate” this value “with small increases”. In the current year, Iacovoni said, Italian gross issues will be around 400 billion euros “in continuity with 2019”, while medium and long-term funding should be around 245-250 billion euros, taking into account the deadlines of around 200 billion and the estimated requirement of 40/45 billion. The expiring BoTs are around 120 billion and, adding the half-yearly BoTs issued in 2020 and expiring in the same year, BoT maturities should reach around 140-150 billion.

Foreign investors are growing their share
The Treasury executive said that “there have been important data on the return of foreign investors so much so that today we have a higher stock of foreign investors holding Italian government bonds than at the beginning of 2018”, when the last one began spread widening phase. Currently, added Iacovoni, the share of government bonds held by foreign investors is equal to 32-33 percent.

Low retail share
The share of Italian government bonds held by retail, again according to what Iacovoni said, is instead at historically low levels, at 5.4% according to the update at the end of October. To involve retail and have a diversified and more stable investor base than the volatility associated with banks’ holding of government bonds, the Treasury, Iacovoni said, is studying a “tool complementary to BTp Italia but which is not replace it. “



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