Italy seen skipping autumn retail bond, crowded out by post office sale
Italy aims to avoid market glut with postal service stake sale
Treasury's last retail bond in May saw muted demand
Italy well on way to meeting funding needs for 2024
By Sara Rossi
MILAN, Oct 25 (Reuters) -Italy will skip its usual autumn issuance of a bond aimed at small savers this year, three market sources said, mainly to avoid a clash with the planned sale of a stake in the state-owned postal service which is also focused on the retail sector.
The Treasury has a long-standing strategy of trying to increase ordinary Italians' holdings of its huge debt pile, raising around 230 billion euros ($248.42 billion) from the sector since the height of the euro zone debt crisis in 2012.
With the exception of 2015, it has always offered a retail bond in the October-November period.
This year, however, it wants to avoid a market glut that could threaten the success of the government's plan to float around 14% of Poste Italiane PST.MI, said the sources, who asked not to be named due to the sensitivity of the matter.
"Two sales aimed at the same investor base would have competed with each other," said one of them, who has direct knowledge of the Treasury's plans.
The Treasury, which normally announces its retail bond plans around three weeks before issuance, was not immediately available for comment.
Rome aims to raise around 2.3 billion euros from its postal service sale, making an extremely marginal contribution to reducing its debt amounting to almost 3 trillion euros.
The government has said it will give priority to savers resident in Italy, including post office employees, encouraging their participation through incentives such as stock price discounts.
However, the prospects for the sale are still unclear. The date of the flotation has yet to be set, and some Italian media have reported it may be delayed until next year and reframed to allow a greater role for institutional investors.
COOL RESPONSE
Italy's last retail bond, which was issued in May, received relatively muted demand, another consideration in the Treasury's probable decision not to offer another one this year.
"That cool response could have already prepared the ground" for a pause in the autumn, a second source said.
A third factor at play is that the Treasury is already well on the way to meeting its funding needs for this year and so has no acute need for cash.
This week it sold 13 billion euros in a dual-tranche syndicated issuance consisting of a new 7-year BTP bond and a tap of a 30-year bond. The success of the sale lowered the likelihood of an autumn retail issuance, some analysts said.
Based on a 2024 medium- to long-term gross funding requirement of 350 billion euros, Italy will have to sell less than 50 billion euros of bonds over the remainder of the year, according to calculations by Italian bank UniCredit.
($1 = 0.9258 euros)
editing by Gavin Jones and Alvise Armellini
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
