Jumbo Demand For New 15-yr Italian Bond Pushes Yield To Record Low

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By Antonella Cinelli

ROME, Feb 11 (Reuters) - A 15-year bond Italy sold on Tuesday drew more than 50 billion euros ($55 billion) in orders from investors, topping record demand seen last month for an Italian 30-year bond and pushing the yield to its lowest level ever.

Italy took advantage of an exceptionally strong market with a second syndicated bond sale in the span of a month, printing 9 billion euros of the new bond, http://wiki.chatonna.de/Utilisateur:EvanSpeight0 a nominal BTP bond due on March 1, 2036.

The Rome-based Treasury set the yield for the new issue at 1.49%, the lowest on record, but still offering an attractive risk premium in a market where returns have been driven lower by negative official interest rates.

While it is the lowest on record for an Italian 15-year issue, the level compares with a yield of 0.7% for Spain's 15-year benchmark, which matures in July 2035.

Italy's current 15-year benchmark, due on March 1, 2035, yields 1.45%.

On Saturday Bank of Italy Governor Ignazio Visco flagged Rome's higher risk premiums compared with Spain or Portugal and warned about the "chronic vulnerability" of its public finances and economic growth prospects.

"Italy's yield curve is basically stable, a sign that the new issue didn't weigh too much and that the market considers the size appropriate," UniCredit strategist Luca Cazzulani said.

The high demand hinged on the "the fact that at this stage of the year investors are still looking for opportunities to make their investments work", he added.

Italy's sale adds to a busy start to 2020, with new syndicated debt placed by many sovereign issuers.

Italian banks have also taken advantage of the favourable moment.

A 30-year BTP bond worth 7 billion euros in January attracted record orders of around 45 billion euros, with 68% of the issue going to foreign investors.

Italy's borrowing costs have been falling since a new centre-left cabinet with a pro-European stance took office following the collapse in August of the previous anti-establishment coalition.

The market window remains positive after the Italian government passed a local election test in the northern region of Emilia Romagna at the end of January.

"There was an expectation that there maybe could be early elections in Italy, and that seems to have gone away now," a banker at one of institutions handling the deal said.

"As such, if you look at the yield levels Italy offers compared to some of the other issuers in the euro market, it looks pretty good," he added.

Most euro zone bond government bonds trade in negative territory.

Goldman Sachs, Morgan Stanley, Nomura, Societe Generale and UniCredit were appointed as joint lead managers for the new 15 year issue.

($1 = 0.9163 euros) (Additional reporting by Yoruk Bahceli in London; Editing by Alex Richardson and Jan Harvey)