Italy Swap Losses, Net Liabilities in 2015 Top Euro Area

  • Derivatives held by Italy burdened debt by 6.8 billion euros
  • Swaps' weight on country higher than on whole region combined

Derivatives burdened Italy’s public debt again last year, making the nation the biggest swap loser in the euro region.

Losses and net liabilities related to swaps held by the country weighed on its debt in 2015 by 6.8 billion euros ($7.7 billion), according to Bloomberg calculations based on data released Thursday by European Union statistics office Eurostat. In the 2012-2015 period, the burden totaled 21.3 billion euros, also a euro-area record.

Italy’s derivative-related losses and net liabilities were higher than those of the whole euro region combined both in 2015 and in the four-year period since in some nations swaps actually helped alleviate their debts.

Governments across the euro region have used derivatives to manage their debt-financing costs and to hedge against sudden changes in rates and excessive exchange-rate volatility. Those deals have sometimes backfired with the effect of pushing nations’ debts even higher.

Italy’s public debt rose last year to almost 2.2 trillion euros, exceeding Germany’s and becoming the biggest in absolute terms in the euro region, Eurostat said in a separate report on Thursday. It is also the bloc’s second-biggest debt after Greece as a percentage of gross domestic product.

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