Bonds News

Italian bond yields rise on coronavirus funding uncertainty

LONDON, April 22 (Reuters) - Italian bond yields and the risk premium the sovereign pays on its debt rose on Wednesday as the funding of the already heavily indebted country’s coronavirus stimulus plans remained uncertain.

It may take European Union countries until the summer or even longer to agree on how to finance an economic recovery from the coronavirus pandemic as major disagreements still persist, an official with the bloc said on Wednesday.

“What we’re generally seeing is that there is less possibility that we are going to get some sort of conclusion on Thursday and even beyond that,” said Peter McCallum, rates strategist at Mizuho, referring to an EU summit on Thursday where measures to support coronavirus-hit economies will be discussed.

Yields across Italy’s curve rose, with the 10-year yield up as much as 10 basis points to 2.27%, a new peak since March 18, when the ECB announced its emergency purchase programme after trading hours.

The gap between its 10-year bond yield and Germany’s - effectively the risk premium Italy pays - rose as high as 271 basis points, just five basis points away from touching their highest since the announcement of the emergency measures. . (Reporting by Yoruk Bahceli; editing by Simon Jessop)