290 likes | 523 Views
Anno Accademico 2009-2010 Scienza delle Finanze Prof. Giuseppe Eusepi. Lezione n. 33 26/5/2010 Dott. Fabrizio Tesseri La gestione del debito pubblico in Italia. Italy’s Debt Management. Fabrizio Tesseri Italy’s Ministry of Economy and Finance (MEF) Public Debt, Department of the Treasury.
E N D
Anno Accademico 2009-2010Scienza delle FinanzeProf. Giuseppe Eusepi Lezione n. 33 26/5/2010 Dott. Fabrizio Tesseri La gestione del debito pubblico in Italia
Italy’s Debt Management Fabrizio Tesseri Italy’s Ministry of Economy and Finance (MEF) Public Debt, Department of the Treasury
Italian government bond structure Source: MEF
Evolution of the debt composition . . . . . Source: MEF Despite the crisis, Republic of Italy has gone on with its key goals in managing public debt: increase of fix rate and duration lengthening have been keeping at their strategic role in the indebtedness policy.
…… duration and average life Average life and duration have lengthened, respectively, from 6.77 and 4.40 in 2006 to 7.07 and 4.87 in April 2010. Source: MEF
The reduction of risks has been achieved without impairing the efficiency of debt funding Source: MEF The Treasury manages its debt in order to keep the cost of funding under control: despite the different interest rate cycles, since 2003 the interest burden of the General Government has always been within the range of [4,5%-5,1%] of GDP.
Bond redemption profile data source: MEF
Monthlyredemptionprofile: 2010 and 2011 2010 2011 Source: MEF
Composition of Foreign Debt (4.85% of the total outstanding) As of 31st March 2010 Source: MEF 9
A cross country comparison of public/private debt ratios in terms of GDP (2008 vs. 2010p) Source: Eurostat
Increasing Public Debt Starting from Lehman default, many European countries faced a big challenge in financing the measures adopted to support national banking systems (Italy really marginally). Concerns about of Governments’ capability of financing public deficits appeared not justified, also thanks to the large liquidity, favoured by Central Banks quantitative easing. MarketableCentralGovernmentDebt 2010 data source: MEF processing fromofficialforecasts
Modification in issuance policies In 2009, the issuance of T-bills recorded an unprecedented pick, generally shortening the duration of public debts and increasing the roll over risk. Italy, again represented an exception. 2010 data source: MEF processing fromofficialforecasts
Issuance strategy for 2010 • Given the gradual improvement of market conditions at a general level and for the Italian debt, issuance activity will continue to rely on principles of regularity, transparency and predictability that have characterized the Italian Treasury issuance policy in the last decade, in order to assure liquidity to both on-the-run and off-the-run bonds. • Throughout the year, the Treasury will stick to the regular issuance of on-the-run but keeping also the flexibility to offer also off-the-run bonds (as carried out in 2008 and 2009), in addition to on-the-runs, to cope with market needs and potential upsurges of volatility on the market. • The new method of auction for medium-long term bonds, adopted since October 2008 and based on a discretional price setting within a preannounced supply range, will continue to be used throughout the year for medium-long term bonds (both nominal and inflation-linked). • As in the previous years new long term nominal bonds and inflation-linked bonds will be launched via syndication. This issuance method has proved to be very effective in bringing a broad basis of qualitative investors in the primary market, in enhancing the liquidity of the security and in providing more flexibility to issuer in terms of timing of issuance. 17
New BTP€I 10y A successful syndicated transaction in a very distressed market environment In April 2010 the Treasury launched the new 10- year BTP benchmark in the inflation sector (BTP €i September 2011), through syndication. The Treasury, despite an environment of heightened focus on sovereign risk, achieved a successful transaction launching this new bond for a total amount of 3bn euros and reaching a total order book of more than 4bn euros. The size of the transaction has been in line with the most recent new inflation linked benchmark transactions from other leading inflation issuers and was the first new syndicated benchmark linked to European inflation in the Eurozone government markets of 2010. The new bond saw an oversubscribed orderbook of high quality and built from 124 different investor orders. The demand came mostly from real money accounts, asset managers, pension fund and insurance companies. Regional distribution was broad: France was a key regions in this transaction, together with Italy at 28.7% and UK/Ireland at 28.1%. Benelux participation was also noticeably -higher than in the BTP€i Sep-19s, at 6.4%. The rest of the transaction was distributed widely across Europe and Scandinavia, in addition to some placement into Asia and the US. The bond performed smoothly on the Italian curve since then.
USD Global Bond 26 Jan 2015 • The Transaction: • The Republic of Italy successfully issued a USD 2.5bn 5-year USD global benchmark on Tuersday, 19th January via joint lead managers Barclays Capital, Citi and Credit Suisse • This is the Republic’s first foreign currency syndicated benchmark transaction of the year and the first US$ 5-year benchmark by a Western European sovereign since June 2008 • The Republic continues to demonstrate its strong commitment to the USD market, with yet another liquid benchmark that satisfies global investor demand for high quality Sovereign Global offerings • The initial price guidance was set at mid-swaps + 45/+47bps. Following solid investor demand the official price guidance was revised to mid-swaps + 45bps and the size was increased to USD 2.5bn By Country By Investor 23
Public Debtbreakdown Source: RUEF, Bank of Italy
Results of Local Authorities monitoring activity: indebtedness as of 31 December 2009 (update April 2010) Source: MEF
Summary of monitoring activity: debt outstanding up to 31/12/2009 24.5% 24.5% 24.4% 76.6% 75.5% 75.5% 42.6% 41.5% 40.2% 57.4% 58.5% 59.8% Source: MEF
Summary of monitoring activity: local debt by maturity Source: MEF