By Silvia Marchetti
ROME (Mace News) – Italy’s government aims to issue more U.S. dollar-denominated bonds this year alongside new green bonds and retail securities aimed at supporting pandemic measures, according to ruling coalition sources.
The goal is to keep diversifying the investor base through new issuances in foreign currencies both in the Global and EMTN (Euro Medium Term Notes) formats, with the dollar operation set to be the most important of all.
In 2019 Rome made a historical comeback on the U.S. financial market after nine years of absence, raising a total $7 billion through the placement of 5, 10, 30 years U.S. dollar denominated bonds. Last year it issued a new 5-year maturity raising roughly $3 billion.
“Our goal is to keep consolidating our presence on the U.S. market by completing as much as possible the yield curve through multiple, stable issuances in the long-run. We want to create a complete curve in U.S. dollar which is parallel to the maturity curve in euro”, said a source.
The ECB’s accommodative stance and lower rates have decreased Italy’s borrowing costs and widened the average life of public debt to roughly seven years, making it more sustainable, said another source.
Italy will also replicate this year at least one issuance of more retail bonds dubbed ‘BTP Futura’ launched in 2020 to fund economic measures to tackle the COVID-19 pandemic, that are exclusively directed to the retail sector.
“The retail sector has proven to be successful; it was a sort of bet to see how many people were actually willing to invest in domestic bonds given Italian families’ high saving rate”, noted a source.
The government is finalizing the technical details for its first “green bonds’”issuance aimed at supporting environmental-friendly investments. Key sectors have been identified but the committee set-up to frame the rules has yet to issue a final plan, though issuance is expected to take place in the first part of this year.
Another novelty of 2021, aimed to further diversify the investor base, will be the issuance of new short term bonds with a maturity between 18 and 30 months which will substitute throughout this year zero-coupon bonds with maturities of 24 months.
Italy’s funding target last year rose to roughly EUR500 billion, up from an initial estimate of EUR400 billion, due to higher deficit spending approved by parliament to tackle the pandemic’s impact.
This year’s funding target is expected to be lower, said the sources, given significant help will come from direct European aid including the Recovery Fund supported by euro bonds issuance.
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Contact this reporter: silvia@macenews.com.
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