By Emelia Sithole-Matarise and Marius Zaharia
LONDON, March 6 Italy's debt offers investors an
"ideal" combination of low risk and high yield, the head of its
debt agency said on Wednesday, adding that demand for Italian
bonds was strong despite political uncertainty there.
A senior Spanish Treasury official meanwhile said there was
little sign that Italy's problems were spreading its way.
Maria Cannata, Italy's head of public debt management, told
a Euromoney bond conference in London that one result of the
investor demand being seen was that her country planned to
launch a 30-year bond and a 10-year inflation-linked offering.
Italian bonds have been hit by major uncertainty after
elections delivered a hung parliament, raising the risk of a
return to the polls and prolonged paralysis of the country's
efforts to bring its 2 trillion euro public debt under control.
But Cannata said investors were keen on Italian longer-term
"There is a big appetite ... in the long-dated maturity
after two years when the market was almost frozen ... Italy (has
the) ideal combination of low risk and a good game in terms of
its return," she told a Euromoney bond conference in London.
Ten-year Italian borrowing costs rose to their highest in
four months at a debt auction last week although the European
Central Bank's longstanding but untested pledge to buy bonds has
staunched a sharp sell-off in the secondary market.
Italy's 10-year bond was yielding 4.64 percent
on Wednesday, down around 10 basis points on the day, compared
with a yield of 1.47 percent on German equivalents.
Germany sold 3.1 billion euros of five-year government debt
on Wednesday in a sale which analysts said went well because
investors' concern over Italy's electoral crisis boosted demand
for low-risk assets.
Nonetheless, Cannata said Italy planned to tap the investor
demand for its longer term paper, while Spain shrugged off
worries related to its southern European peer.
"We intend to restart with the lengthening of the duration
in the average life of our debt," Cannata said. "We are ready to
launch also a new 30-year (bond) as soon as possible."
Speaking at the same conference, Spain's deputy head of
Treasury, Ignacio Fernandez-Palomero Morales, said there was
little sign that Italy's problems were having an impact on
"Markets have been relatively stable in an uncertain
scenario. We haven't really been affected (by uncertainty in
Italy). I think contagion ... has broken to some extent. It is
seen more as a domestic problem in Italy rather than a systemic
problem," he said.