off-the-wire

UPDATE 4-Italy sees huge investor demand at new 30-yr bond sale

Kitco Media
By Reuters
Published:
Updated:
Reuters
(Adds foreign investors share in paragraph 5) By Alessia Pe and Antonella Cinelli MILAN/ROME, Feb 16 (Reuters) - Investor demand totalled over five times the amount offered at Thursday's Italian syndicated sale of a new 30-year BTP bond placed for 5 billion euros ($5.35 billion), which received final orders exceeding 26.7 billion. The spread for Rome's new note due on October 1, 2053 was set at 14 basis points over the outstanding BTP maturing on September 1, 2052 which was paying around 4.46% on Thursday afternoon. That compared with initial indications of around 16 bps, according to a lead manager memo seen by Reuters. The deal grants a 4.5% fixed coupon and was sold at a reoffer price of 99.559%, equal to an annualised yield of 4.578%. Foreign investors bought 57.3% of the new 30-year BTP bond, the Treasury said in a statement.


Italy's latest offer faces a particularly challenging market, with short-dated government bond yields ballooning at a more-than-10-year high as central bank officials have continued to advocate more interest rate hikes to try to tame inflation. Pressure was especially heavy on short-dated paper, with the 2-year BTP bond yield bouncing to a record since August 2012 while 10- and 30-year lines hover around the 2023 highs seen in early January. "We see that investors are looking for riskier assets, especially US investors, so obviously Italian bonds are a must in this context," said Christopher Dembik, head of macro analysis at Saxo Bank.


"I bet Japanese investors were among the main buyers as they are looking for yields," he added.


The Treasury said on Wednesday it had hired Deutsche Bank A.G., J.P. Morgan SE, Nomura Financial Products Europe GmbH, Société Générale Inv. Banking and UniCredit to manage the sale. Rome returned to the capital market with a syndicated deal after the 7 billion euros placed early in January in a 20-year line, which attracted orders for 26.5 billion euros. ($1 = 0.9342 euros) (editing by Gavin Jones)

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