MILAN, March 20 (Reuters) - Total orders for a new March 2016 inflation-linked Italian government bond aimed at retail investors reached 2.3 billion euros on Tuesday morning, Reuters data showed, with 2-1/2 days still to go before the end of the offer.
The Treasury, which aims to use proceeds from this sale and three other similar offerings in the rest of the year to cut bills issuance, started selling the new BTP Italia on Monday morning. The offer closes on Thursday..
After coming dangerously close to financial disaster in late 2011, Italy has met healthy demand for its debt at recent auctions helped by the European Central Bank’s liquidity largesse and rising confidence in the reform-driven government of Prime Minister Mario Monti.
Analysts warn that markets may react badly if Monti fails his most important test yet. The respected economist is meeting with unions on Tuesday as he seeks to reach a crucial deal on labour reforms and boost Italy’s employment and productivity.
The Treasury will fully meet demand from investors and has set no official size target the issue. The bond attracted 1.56 billion euros in orders on the first day alone, matching analysts’ expectations for the overall issue volume.
Unlike existing Italian linkers, the March 2016 BTP Italia is tied to a domestic inflation index and some Italian insurers have said they could be interested in it.
Dealers reported on Monday of single orders worth up to 1 million euros which they said were unlikely to have come from private investors. However, they expected most institutional investors to wait until the last day before bidding, to be able to assess market conditions.
The Treasury said on Friday the bond, which will be priced at par, would pay a coupon of at least 2.25 percent with a final level to be set on Thursday at the closing of the offer. (Reporting By Gabriella Bruschi and Valentina Za; editing by Ron Askew)