The issuance of the Italian BTP is underway, retail orders over 2 billion euros

The eighteenth issue of the BTP Italia started this morning, an offer that will continue until Wednesday for retail investors, unless it is closed early. The window reserved for institutional investors is only from 10:00 to 12:00 on Thursday morning. Shortly after 1.30 pm, the placement of the bond sees retail orders for over 2 billion euros, 2.155 billion to be precise.

Guaranteed minimum coupon of 1.6%

The bond, November 2028, guarantees a minimum coupon equal to 1.6%, identical to that of the last issue which had seen an interest for a total of 9.45 billion, 7.27 billion of which assigned to retail customers, on a maturity at eight years old. The launch of the Italian BTP takes place in a week that promises to be intense in terms of issues in the euro area, with about 20 billion securities offered at auction and the EU preparing a syndicate, Unicredit Research experts stressed.

Unicredit Research believes that the latest rally in corporate credit is not justified

Against a backdrop of strong rally in European equities and following better-than-expected US inflation data, European corporate credit spreads tightened significantly last week, with high yield contracting of 35bps to 405bps, a level not seen since last June, and hybrids that contracted 20bps to 283bps, a level not seen since last September, Unicredit Research experts noted. However, they warned, “we believe the risks to economic growth will remain high in the future as well. Furthermore, the hawkish tone of ECB policymakers continues to dominate. Overall, we believe the latest corporate credit rally is not justified. and we see an upward correction in spreads in the coming days. “

Panetta (ECB): aggressive rate tightening is not justifiable

This morning, the member of the board of directors of the ECB, Fabio Panetta, speaking in Florence at a conference on the theme “Finding the Gap”, stressed that inflation is currently high and the risks associated with this situation should not be underestimated. “Monetary policy must be tightened to ensure that inflation does not become entrenched,” he said, adding, however, that “in light of the progress already made in adjusting our political stance, aggressive tightening is not advisable.” The impact of current shocks on the output gap is “clearly unclear,” Panetta continued, and “it would be misleading to base aggressive tightening on assumptions that cannot be conclusively motivated. The consequences of possible errors may not be perceptible today. , but they would become evident over time. It may, therefore, be too late to completely reverse them. “

The ECB experts’ projections published in September, which forecast inflation close to 2% at the end of the forecast horizon, are consistent with a withdrawal of monetary policy accommodation. “But the uncertainty surrounding the dynamics of supply and demand requires us to remain cautious about how far the adjustment must go. And we must not ignore the fact that the tightening, which has resulted from our decisions since the end of the year. 2021 and the expectations of further adjustments to our position, it is already making its way into the economy, with the usual transmission delays “. The estimates, Panetta concluded, “suggest that this tightening will subtract on average more than one percentage point from annual real GDP growth each year until 2024 compared to a scenario in which interest rates and budget expectations had remained unchanged since December 2021 “. As early as November 1, the Spanish councilor, Pablo Hernandez de Cos, said that the ECB is not obliged to launch another rate hike of 75 basis points at the December meeting. “The fact that we raised rates by 75 basis points … does not mean that this will be the future design, it will depend on the data,” explained de Cos. Thursday 17 key Eurozone inflation data ending in October (Preliminary: 1.5% month over month; 10.7% year over year; consensus: 1.4% month over month; 10.7% year over year ).

Spreads and 10-year BTP yields down while waiting for Fitch on Italy

Today, November 14th, there is an adjustment session on the European bond market. The yield of the 10-year Bund falls to 2.098% and that of the 10-year BTP to 4.15% with the BTP / Bund spread falling to 205 basis points. On Friday 18 November, the rating agency Fitch ruled on Italy’s sovereign rating, currently BBB with a stable outlook. Last Friday, after the close of the markets, Moody’s released a credit opinion on Italy, in which it spoke of a better than expected economic performance in 2022 – 3.7% the estimate from 2.7% of the previous one – restricted, however , to the unknown of energy supply. As for the outlook on the rating – today Baa3 with a negative outlook since August – a worsening of the assessment on sovereign creditworthiness would occur in the event of a significant weakening of the medium-term growth prospects, also due to the possible failure to implement the reforms outlined by the Pnrr. Risks on the rating would also derive, according to Moody’s, from a sharp rise in financing costs and a too casual budget policy. (All rights reserved)