March 19, 2014 / 3:22 PM / 4 years ago

Italy mulling issuing new 15-year bond-sources

MILAN, March 19 (Reuters) - Italy is considering issuing a new 15-year bond, two market sources told Reuters on Wednesday, adding its launch was not imminent.

“The Treasury is weighing up whether to launch a new 15-year bond. It’s not imminent but they’re seriously considering it,” one source said, adding the current 15-year benchmark had reached a decent outstanding size and the market situation was good.

At auction last week, the Treasury tapped the September 2028 bond, fetching a record low yield of 3.85 percent. The sale brought the bond’s oustanding amount above 18 billion euros.

The bond is expensive on the secondary market trading well above par at around 110.

Italy last issued a new 15-year maturity in January 2013. The Treasury declined to comment.

A second market source said the Treasury was generally ready “to pull a new 15-year bond out of its drawer but not just yet.”

The source said that the longer maturity required “more careful handling” than a benchmark 10-year one.

Italy sold a new 10-year inflation-linked bond last week through a syndicate of banks for 4.5 billion euros.

Italy is expected to issue a new inflation-linked bond aimed at small investors over the next few weeks and the Treasury may want to wait until after that to launch the new 15-year line.

Italy is trying to extend the average life of its 1.8 trillion euro debt, after becoming over-reliant on shorter maturities during the euro zone sovereign debt crisis. As a consequence the average life fell to 6.4 years at end-2013 from 7.2 years at end-2010.

Investors have snapped up debt from weaker euro zone countries this year, lured by the extra yield offered in the current low-rate environment, amid improving prospects for the economies worst-hit by the crisis. (Reporting by Luca Trogni, writing by Valentina Za, editing by Isla Binnie)

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