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Heading into 2019 with the ECB's sovereign debt QE ending, there was a question who would buy Italian debt at a time when the biggest buyer of Italian debt in the past two years, Mario Draghi, had stepped away. The answer, it appears, is everyone.
On Wednesday, Italy priced €8 billion euros ($9.1 billion) of 30 Year bonds in its second syndicated sovereign sale this year, as investor appetite is appears to only be growing following the record-breaking deal just three weeks ago.
Orderbook - Record - Demand - Paper - Oversubscribed
Not only was the total orderbook the largest on record, with demand for the 30Y paper surpassing €41 billion, but coming in at over 5x oversubscribed, today's offering was even stronger than January's sale of €10 billion in 10Y notes which saw a total of €46.5 billion in demand. Confirming the demand frenzy, the September 2049 notes priced at 18 bps above benchmark rates, as much as four basis points tighter than the initial price target.
Today's record oversubscribed offering came even as the European Commission was said to slash Italy's 2019 growth forecast to a fraction above recession, or 0.2%, from 1.2%. This also means that the Italian budget deficit, the source of so much consternation heading into 2019, will indeed be far greater than what is generally accepted due to the lack of growth which will have to be made up with, you guessed it, even more debt.
Bloomberg - Notes - Italy - Debt - Year
As Bloomberg notes, Italy aims to raise about €250 billion of debt this year, a number which until recently was seen as insurmountable with the ECB out of the picture, and Rome has rushed back into the bond market to take advantage of calm financial conditions and a declining risks that the Fed will raise interest rates which in turn is stoking demand for high-grade debt and yield. Austria, Belgium and...
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