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Italy’s Bond Investors Rocked by Prospect of Fresh Elections

  • BofA sees early vote triggering a rapid rise in spread levels
  • ECB has helped to drive down yields during the pandemic
The Palazzo Chigi, the headquarters of the Italian government, in Rome.

The Palazzo Chigi, the headquarters of the Italian government, in Rome.

Photographer: Alessia Pierdomenico/Bloomberg
Updated on

Italian political concerns are bubbling to the surface for bond investors with a growing risk of fresh elections in the summer threatening to compound the economic uncertainty wrought by the coronavirus crisis.

The nation’s bonds slid Thursday following a report by the country’s ANSA newswire that the Democratic Party, part of the ruling coalition, sees a risk of fresh elections in June. Bank of America Corp. says that could widen the country’s 10-year yield spread over Germany -- a key gauge of risk -- to 140 basis points, the highest since November.