Italy Bond Diversification Seeks to Meet Investor Funding Needs


Italy is seeking to broaden its investor base and bond portfolio to tap into huge demand for its debt.

The sale of a new BTP Short Term note on Thursday replaces the mostly domestic-orientated zero-coupon debt, and adds to a recent trend toward diversifying its bond offerings. A debut sale of green bonds smashed peers earlier this month, in a sign of investor confidence in a new product and in Prime Minister Mario Draghi’s leadership after the political turmoil of recent years.

“We expect demand for this bond to be strong,” wrote Chiara Cremonesi, a strategist at UniCredit AG. “The Treasury aims to offer a more liquid alternative at the short end of the Italian curve and attract a more diversified investor base at this tenor.”

Last year, Italy launched a BTP Futura retail bond with payments linked to the nation’s gross domestic product, adding to an arsenal of similarly targeted and longer-established BTP Italia debt. It also expanded overseas with sales of dollar-denominated bonds.

The Treasury will sell as much as 4 billion euros ($4.7 billion) of the BTP Short Term bond with a 0% coupon and maturing in November 2022, alongside an offering of as much as 1.25 billion euros of 0.4% inflation-linked debt maturing in May 2030 at 10 a.m. London time on Thursday.

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