Thursday, 17 January 2013

Borrowing While the Going's Good

The head of Italy's debt management office, Maria Cannata (now there's a job - upwards of 2 trillion euros to finance)  has declared that  Treasury  strategy  is not specifically tied to the general elections at the end of February.  Eyebrows up.

"Market sentiment for Italian bonds is pretty favourable at the moment and the Treasury grabbed a window of opportunity",  with the new 15-year bond,   she told Reuters. Eyebrows rising further.

Italy paid 4.8% in comparison with the 2% Germany pays to borrow over 15 years, which is really not bad at all considering that last July  the yield was 7.1%  for Italy as the current Prime Minister tried to correct the effects of, as he noted yesterday, Italy not having had a prime minister for years.

As the gloves come off with the official opening of Monti's campaign this weekend in Bergamo (and the opening of his political campaign media centre and offices in the Corso in central Rome) we can expect multi-layered political fighting to break out everywhere.  Which is probably why Italy has already raised 34 billion euros towards the 420 billion euros it needs to borrow this year, before the unease over increasing political uncertainty (which the ECB says is causing capital outflows) starts driving up debt costs to unbearable levels again.    We don't want to have to ask the ECB to buy the debt now, do we?   Not unless we are the statist Leftists of the Democratic Party who would give up even Italian economic independence for the trappings of power.

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