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Orders for Italian Government Retail Bonds Top $27 Billion

Italian Flag
The Treasury last year began reaching out to Italians, who are among the biggest savers in Europe, to help manage its 2 trillion-euro public debt as contagion from the debt crisis triggered an exodus of foreign investors. Photographer: Marc Hill/Bloomberg

Nov. 6 (Bloomberg) -- Investors ordered more than 20 billion euros ($27 billion) of Italian government inflation-linked bonds aimed at retail investors, easing funding pressure on the Treasury.

Italy had initially planned to take orders through Nov. 8, and said yesterday it would close the books early because of strong demand. Orders reached 16.8 billion euros yesterday, almost doubling the amount sold on the first day of the previous sale in April. The Treasury has sold 3.2 billion euros as of 11:20 a.m. in Rome today, a spokeswoman for Borsa Italiana said.

The four-year bond, dubbed BTP Italia, carries a 2.15 percent coupon that proved attractive to buyers even amid weak consumer prices. The Treasury said it will close the sale at 2 p.m. local time, according to a statement.

“Currently very low Italian inflation is not perceived to be anything more than transient,” Marc Ostwald, a rates strategist at Monument Securities Ltd. in London, said by e-mail. It also shows that “domestic retail investors do not see any medium-term risk of default and perhaps that retail investors trust their money more with the government than local banks.”

The Treasury last year began reaching out to Italians, who are among the biggest savers in Europe, to help manage its 2 trillion-euro public debt as contagion from the debt crisis triggered an exodus of foreign investors. In the four sales of the BTP Italia since March 2012, Italy has raised more than 44 billion euros.

The sale allows the Rome-based Treasury “to potentially lower the issuance volumes for November and December,” Commerzbank AG analyst Peggy Jaeger wrote today in a report.

“This has proven a very popular instrument and is a very good way of funding,” Luca Cazzulani, a senior fixed-income strategist at UniCredit SpA in Milan said by phone. “From the success gathered in the market, Italy should do more lines next year.”

Italian 10-year yields dropped 3 basis points to 4.1 percent at 11:58 a.m. in Rome, pushing the spread over comparable German bunds to 241 basis points.

To contact the reporters on this story: Chiara Vasarri in Rome at cvasarri@bloomberg.net; Lorenzo Totaro in Rome at ltotaro@bloomberg.net

To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net; Jerrold Colten at jcolten@bloomberg.net

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