Investors pile into Italian and Irish debt

On the 01/06/21 at 7:26AM

Italy and Ireland have tapped into investor appetite for eurozone government debt with the year’s first major sovereign issues. On Tuesday, Italy’s benchmark bond maturing in March 2037 was oversubscribed more than 10 times, with more than €105bn in demand and €10bn actually served. The Italian treasury had mandated five banks (Barclays, HSBC, Morgan Stanley, SG CIB and UniCredit) for this 15-year BBB rated issuance serving a 0.95% coupon. Heavy demand allowed it to price the issue at just 8 basis points (bp) above existing 15-year BTPs, which were yielding about 0.86%.

Ireland, meanwhile, received more than €40bn in demand for its 10-year syndicated, 0%-coupon bond for which it ultimately raised its offering from €3-4bn to €5.5bn while lowering its issuance price from MS+2bps to MS-2bps, as Irish yields hit a record low of -0.34% on Monday, as the threat of a no-deal Brexit receded.

ING points out that euro zone countries will raise more than €1,000bn in debt this year to combat the pandemic’s economic fallout but that the European Central Bank’s Pandemic Emergency Purchase Programme (PEPP) will be more than enough to meet the net supply.