The Treasury of Italy has made a debt issue with which it has raised a total of 14,000 million euros between retail investors and others 22,300 million euros between institutional investors. It is a bond aimed at the retail investor with a maturity of 5 years and which is indexed to the Italian inflation rate.
Italy has confirmed that the profitability of the real coupon will be 1.4%, an attractive return in the current negative rate scenario.
The government will use the funds to offset the negative impact of the coronavirus crisis on the Italian economy, whose debt is skyrocketing. “This was the best placement ever for retail investors“commented a Treasury source collected by ..
Italy is one of the most indebted countries in the European Unionsince your debt to GDP ratio is situated in the 137% and forecasts anticipate that the 153% in 2020. The profitability of Italian 10-year bond is currently situated in the 1.63%.
On April 24, the agency S&P Global Ratings kept Italy’s rating unchanged at BBB, with a Negative Outlook. To mitigate the economic consequences of the public health emergency, the Italian authorities have launched budget stimulus measures worth 1.5% of GDP and have provided guarantees for small and medium-sized enterprises (SMEs) and exporters worth 25% of GDP, explains S&P.
These measures, together with the pre-existing automatic stabilizers, will push the Italy’s public deficit up to 6.3% of GDP this year, and will increase public debt to about 153% of GDP by the end of 2020, according to his projections.
The agency highlighted as positive that the ECB is supporting this additional public debt after launching its asset purchase program, which together represents more than 9% of the eurozone’s GDP. The monetary organization launched in March a new asset purchase program for 750,000 million euros to try to ease financial tensions in the eurozone.
The new program was named Pandemic Emergency Purchase Program (PEPP), a Pandemic Emergency Purchase Program, and has served to relax increasing stress on risk premiums of the most affected countries, such as Italy and Spain.
S&P highlighted as Italy’s credit strengths its rich and diversified economy, its position of net external creditor and the lowest levels of private debt in the G7, which partially compensates for the impact of the large public deficit on its solvency.
The agency explained that only consider lowering the rating if he deficit it is not on a clearly downward path “in the next three years or if there is a marked deterioration in loan conditions that jeopardize the sustainability of public finances, including, for example, due to insufficient support measures at the eurozone level“