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Italy’s Top Euroskeptic Made Hefty Profit From Salvini’s Bad Bet

Italy’s Top Euroskeptic Made Hefty Profit From Salvini’s Bad Bet

(Bloomberg) -- Claudio Borghi, Italy’s most vocal euroskeptic, has found a silver lining in the fall from grace of Matteo Salvini, the head of his far-right League party.

While Salvini’s gamble that the country would go into early elections backfired and the populist leader has been sidelined for the moment, Borghi, who in the past helped push Italian bond yields to multi-year highs with his incendiary statements, made a bumper profit from his boss’s miscalculation.

Borghi, the head of Italy’s lower house budget committee, said in a tweet Wednesday that he sold the bonds he had bought almost a year earlier. On that same day, 10-year yields dropped to a record low as investors cheered the prospect of a new government supported by the unlikely alliance between the Five Star Movement and Democratic Party.

Borghi had announced his purchase of long-term Italian bonds in another tweet on Sept. 28 last year, when 10-year bond yields touched 3.15%. A few days later, on October 2, Borghi said that if Italy had its own currency it would be able to “resolve its problems.”

Bond yields surged as high as 3.81% that month as the budget standoff with the European Union reached its peak. They have since fallen dramatically, mostly on the expectation of further stimulus by the European Central Bank.

They dropped below 1% for the first time on Wednesday and touched a record low of 0.92% Thursday amid market optimism over Italy’s prospects under its new leadership.

Italy’s Top Euroskeptic Made Hefty Profit From Salvini’s Bad Bet

Contacted by Bloomberg, Borghi confirmed he made a return of about 25%, defying the skepticism of the investors who bet against Italian assets last year.

“The scaremongering that they engaged in when we were in government was absurd,” Borghi said.

--With assistance from John Ainger.

To contact the reporters on this story: Marco Bertacche in Milan at mbertacche@bloomberg.net;John Follain in Rome at jfollain2@bloomberg.net

To contact the editors responsible for this story: Christopher Kingdon at ckingdon@bloomberg.net, Alessandro Speciale, Jerrold Colten

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