Italian Treasury to Sell Bonds Directly to Retail Investors
December 27, 2011, 8:16 PM ESTBy Chiara Vasarri
Dec. 27 (Bloomberg) --The Italian Treasury said it will go ahead with a plan to sell a new debt instrument directly to retail investors in 2012.
The new bond will be sold through Italy’s electronic debt exchange known as MOT, the Rome-based Treasury said in its 2012 debt auction plan released today. The Treasury, which did not give details on the new bonds, said it may also consider selling existing bonds directly to retail investors through the program.
Italy needs to sell almost 450 billion euros ($586 billion) of debt next year to pay for maturing bonds and bills and to cover the government’s budget deficit, Maria Cannata, director of public debt, told Il Sole 24-Ore said on Dec. 24.
Italy’s Treasury faces 202 billion euros of bond redemptions and will need to finance a deficit of 23.6 billion euros, Cannata told the newspaper. The Treasury hasn’t yet released the official goals of its 2012 debt program.
The Treasury announced on Dec. 23 that it would auction four new bonds in the first quarter of next year and said it would seek to sell between 9 billion euros and 12 billion euros of each before they would replaced by a new benchmark. The securities are a zero-coupon note maturing Jan. 2014, a three year bond due in March 2015, a five-year bond due in May 2017 and a new 10 year maturing in Sept. 2022.
Auction Announcements
Other changes to the auction process published today include making a single announcement of the amount and type of securities to be issued three days before the start of the auction “to manage more effectively the extreme volatility that characterizes the market for government debt in this phase,” the Treasury said. This year the Treasury would first announce the bond that would be on sale and then days later announce the amount to be sold.
The plan for 2012 will also allow specialists in government bonds to buy more debt at follow-up auctions held the day after the main debt sales. Probably starting from the second quarter, primary dealers will be allowed to request bonds worth as much as 15 percent of the amount sold at the main sale, higher than the 10 percent in 2011. They will be allowed to order as much as 30 percent if it is the first tranche of a new bond, the Treasury said.
--Editors: Andrew Davis, Leon Mangasarian
To contact the reporter on this story: Chiara Vasarri in Milan at cvasarri@bloomberg.net
To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net
