January 15, 2020 / 5:46 PM / 3 days ago

UPDATE 4-Italy rides new year debt spree with record 30-year bond orders

(Adds details on yield)

By Sara Rossi

MILAN, Jan 15 (Reuters) - Italy will print 7 billion euros ($7.8 billion) of a new 30-year BTP bond, taking advantage of market momentum for euro zone borrowers after getting record orders for the new issue.

Bids for the new bond, which matures on Sept. 1, 2050, topped 47 billion euros, the highest-ever demand for an Italian syndicated issue, one of the lead managers said on Wednesday.

Italy’s sale adds to a busy start to 2020, with new syndicated debt placed by sovereign issuers including Spain, Ireland, Portugal and Belgium.

On Tuesday, Spain sold 10 billion euros of its new 10-year bond, attracting demand for more than 52 billion euros, the largest order book for a euro zone bond sale.

Luca Cazzulani, a strategist at Unicredit, said Italy had played its part in the new year issuance period, when activity is normally intense.

“The timing was good too. Local elections later this month could give the market some more volatility, and investors typically buy extra-long maturities as a defensive position,” Cazzulani said.

Citizens of the northern region of Emilia Romagna will vote on Jan. 26 in a key election test for the government, made up of the 5-Star Movement and the Democratic Party (PD).

Italy’s borrowing costs have been falling since a new centre-left cabinet with a pro-European stance took office following the collapse in August of the previous anti-establishment coalition.

The Treasury has set the yield for its new issue at 2.50%, the lowest for an Italian 30-year bond sale since May. This represents 6 basis points over the 3.85% Sept. 1, 2049, BTP bond, below initial guidance of around 9 basis points.

The 2049 BTP bond is Italy’s current 30-year benchmark, which Rome sold last February in a syndicated sale, raising orders for 41 billion euros.

Italian banks are also taking advantage of the favourable market window in fixed income. Among them, UniCredit, the country’s largest bank, sold 2 billion euros of senior non-preferred (SNP) bonds. UBI Banca and Banco BPM both sold hybrid Additional Tier 1 (AT1) bonds.

On Wednesday, state-owned Monte dei Paschi also tapped markets with a subordinated debt issue.

Barclays, BNP Paribas, Citigroup, Credit Agricole and Monte dei Paschi di Siena are joint lead managers for the issue. ($1 = 0.8969 euros) (Writing by Giulio Piovaccari; Editing by Larry King; Hugh Lawson and Alexander Smith)

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