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Bond Funds Bank on Italy's Past Form to Buy Amid Vote Jitters

  • Allianz and Fidelity buy Italy bonds in runup to March 4 vote
  • Investec ready to add to short position should risks worsen
Updated on

Italy’s looming election is widely seen as this year’s biggest political risk in Europe, but the bond market isn’t unduly worried.

The yield premium on the nation’s 10-year debt over German bunds is on course for a fourth quarterly decline, reflecting solid investor confidence that’s in contrast with the trend seen in France’s markets before it went to vote last year. Brian Tomlinson, a money manager at Allianz Global Investors GmbH, favors buying 15-year Italian securities against five-year German ones, and Fidelity International is picking up Italy’s notes versus Spain’s.