The executive aims to support the investments of Italians in sovereign debt
Twelve billion raised in November alone. Strengthened by the success of government bond issues, the Ministry of the Economy is also studying a new tool dedicated to retail for this year. This was reported by Reuters which explains how in Italy, in October 2022, businesses and households held 8.9% of the debt (data from the Bank of Italy).
On several occasions, moreover, the government led by Giorgia Meloni he hoped that small savers could increase the weight of their investments in Italian debt. The goal, you explained, is to “reduce dependence on foreign creditors, increasing the number of Italians and residents of Italy who hold shares of debt.”
With inflation running rampant, the market has responded well
Indeed, the Treasury brought forward the issuance of the BTP Italia compared to the usual windows, trying to intercept the interest of small savers whose deposits are dealing with the erosion due to the flare-up of inflation.
According to several observers, the market conditions are moreover favourable even if there is an unknown factor: in the coming months (between April, May and November) three different Btp Italia will expire, the first launched in 2015 and the other two in 2017, for a total of almost 25 billion euros. In the first phase of the year, there was a substantially downward trend for yields on the secondary, with investors continuing to bet on rate cuts. Even in spite of the declarations of the central banks, first and foremost the ECB.
With the 2023 emissions, Via XX Settembre is essentially playing in advance by offering the new stock indexed to inflation and dedicated to retail in early Marchrather than in April-May period which, together with October-November, represents the traditional offer window.
Inflation puts savings at risk
For this reason, the government is convinced that it can convince Italians to shift part of their investments to the national debt. Moreover, Italian families historically have a high saving rate: with a percentage of almost 86% in deposits and cash in relation to GDP , Italians are far above the French (74%), Germans (81%) and Spanish (80.6%) as reported by the ECB with the data relating to the third quarter of 2022, processed by Scope Ratings. “The liquidity of Italian households potentially offers the Treasury a growing investor base, looking to the near future,” he explains Alvise Lennkh-Yunusdeputy head sovereign and public sector di Scope Ratings.
Fabi raises the alarm: the high cost of living is eroding current accounts
According to the Italian banking union (Fabi), the high cost of living is eroding current accounts of Italian families whose balance, for the first time since 2017, drops by almost 20 billion in 2022. “The survival of savings in today’s times is no longer a guarantee and this is demonstrated by the data on the pockets of Italians, lightened by the waves of continuous flare-ups in energy prices and by a generalized inflation that is increasingly on the rise”, claims the union.
In detail, Fabi points out that although inflation in the euro area has taken a downward path, falling to 8.5% last January, in Italy the slowdown is less evident. The harmonized index of consumer prices Ipca stood at 10.9% per month Thus the real value of the deposits of Italian savers suffered a much greater decline than those of Spain.
Hence the attention of Italians to public debt securities and the prospect of increasing the share of sovereign debt in the portfolio given that bank deposits are also less attractive than in the past. Even in spite of the recent increase in interest rates which has not been reflected in current account remuneration.
“The average rate on bank funding was 0.50% in September 2022, slightly up on the same month of the previous year, when the rate was 0.45%– concludes Fabi – In 12 months, therefore, a positive change of just 5 basis points. In the period in question, the average rates on new mortgages, on the other hand, went from 2.19% to 2.49% with a positive change of 30 basis points”.