MILAN, Jan 11 (Reuters) - The Italian treasury may launch a new 15-year benchmark bond through a syndicated sale as soon as next week to take advantage of favourable market sentiment, analysts said on Friday.
Last time Italy sold a new 15-year benchmark was in September 2010, before the country was engulfed by the sovereign debt crisis that pushed its borrowing costs above 7 percent on 10-year bonds at its peak in November 2011.
“Next week could be the right one, as Thursday’s and Friday’s auctions went well and the liquidity in the market is abundant,” said Alessandro Giansanti, strategist at ING in Amsterdam.
“As Italy comes closer to a crucial general election scheduled on Feb. 24-25, market volatility may rise, blocking the launch of a new long-dated paper until the spring or even later,” Giansanti said.
Rome sold 3.5 billion euros ($4.67 billion) of three-year bonds on Friday, paying a 1.85 percent yield which was the lowest since March 2010.
On Thursday, borrowing costs fell more than 50 basis points at a one-year bill sale.
The yield on a March 2026 BTP bond, the last 15-year benchmark bond launched by Italy, was hovering around 4.40 percent on Friday afternoon after the strong rally seen in Italian debt in the last few days.
The comparable German Bund maturing January 2028 offers a return of around 2.1 percent.
“Investors are extremely hungry for higher returns and they are looking also at longer-dated paper,” said the head of primary market trading for a big UK bank, who asked not to be named.
A new 15-year benchmark could pay a coupon of 4.5 percent and mature in April or October 2028, analysts say.
At a mid-December sale, Italy sold 730 million euros of its March 2026 BTP bond, paying a yield of 4.75 percent.
The treasury declined to comment on the possibility of issuing a new 15-year benchmark bond.
$1 = 0.7493 euros Reporting by Gabriella Bruschi, writing by Francesca Landini; editing by Ron Askew