After Prime Minister Mario Monti announced Italy's debt will reach a post-war record this year, the Treasury is tapping investors with the sale of as much as €7.5 billion of bonds.
The Italian Treasury will offer as much as €4 billion of a new three-year bond, €2 billion of 15-year debt and €1.5 billion of floating-rate notes. The auction should get “strong support” from €16.7 billion in redemptions due April 15 that will leave investors with funds to reinvest.
Italy’s bond yields declined yesterday even after the government announced that its debt will rise to 130.4 per cent of gross domestic product from 127 per cent last year as the third-biggest economy borrows to contribute to bailouts and pay arrears to government suppliers. The government managed to keep its budget deficit within the EU’s limit of 3 per cent of GDP, easing some of the concern over the debt level.
While Italy awaits a new government, talks between political parties are focusing on the election of the successor to Italian President Giorgio Napolitano, who may be chosen later this month.
While the position is largely ceremonial, a possible compromise on the appointment between former Prime Minister Silvio Berlusconi’s People of Liberty Party and Pier Luigi Bersani’s Democratic Party may be the first step in forging some kind of coalition government. Bersani won a majority in the Chamber of Deputies in the Feb. 24-25 vote, while falling short in the Senate, where Berlusconi has a blocking minority.
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