Giovedì, 20 Settembre 2018

Bond spread widens to 260 basis points


Rome, August 27 - Political uncertainty in Italy
triggered market nervousness and widened the spread between the
benchmark Italian bond and its German counterpart to 260 basis
points by mid-afternoon Tuesday.
That spread between 10-year Italian BTPs and the German
Bund almost matched the 262 basis point spread between German
and Spanish bonds.
It was also significantly wider than Monday's
Italian-German closing spread of 249 basis points.
The spread between lending rates in the two countries is
seen as an indication of investor faith in the Italian economy
and its ability to cope with a lingering recession amid
political uncertainty.
The yield on 10-year Italian paper climbed to 4.43% by
mid-afternoon, up from Monday's closing yield of 4.38%.
Milan's top stock exchange plunged dramatically Monday amid
investors' fears that Italy's fragile coalition government could
collapse over a legal controversy involving ex-premier Silvio
The coalition involving Berlusconi's centre-right People of
Freedom (PdL) party and the centre-left Democratic Party (PD) is
also floundering over the future of the controversial IMU
housing tax which the PdL campaigned on abolishing.
However, the PD is adamant the tax should instead be
reformed as government coffers cannot afford to lose the IMU
revenues entirely.

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