Italy set the size of a sale of 30-year bonds via banks at 6 billion euros ($7.72 billion), according to a person familiar with the matter who asked not to be identified because they’re not authorized to speak about it.
Investors submitted bids of more than 12.7 billion euros for the securities due in September 2044, which will be priced to yield 13 basis points more than the current 30-year benchmark, the person said. The Finance Ministry said yesterday it would sell the bonds through syndication and mandated five banks as lead managers. The books closed at 12:15 p.m. London time.
This is the first time the country has sold a new 30-year benchmark security since September 2009. Spain sold 7 billion euros of new benchmark 10-year notes through banks yesterday.
It’s probably more convenient for Italy to sell the bonds via a syndication, Alessandro Giansanti, a senior rates strategist at ING Groep NV in Amsterdam, said by phone. “The size is normally bigger than a standard auction and it also allows the Treasury to have a better idea of who the buyers are.”
Italy’s 30-year yield increased seven basis points, or 0.07 percentage point, to 4.86 percent as of 2:52 p.m. London time after falling to 4.57 percent on May 3, the lowest since March 2007.
The timing “looks very good since yields are still close to their lows,” said Gianluca Ziglio, executive director of fixed-income research at Sunrise Brokers LLP in London.
The new government of Prime Minister Enrico Letta may pass this week measures to spur economic growth after the austerity policies by his predecessor Mario Monti deepened a recession.
At a meeting on May 17 in Rome, the cabinet will probably suspend the next payment of the property tax assessed on primary residences and to renew a temporary layoff program as unemployment remains near a 20-year high.
Italy’s economy contracted more than forecast in the three months through March as weak domestic demand extended a recession to its seventh quarter, the National Statistics Institute Istat in Rome said in a preliminary report today.