January 28, 2020 / 12:32 PM / a month ago

PIMCO sees room for Italian-German bond yield spread to narrow

MILAN, Jan 28 (Reuters) - The spread between yields on Italian benchmark government bonds and German Bunds could narrow to around 100 basis points, a sovereign credit analyst at U.S. Investment firm PIMCO, one of the world’s biggest bond investors, said on Tuesday.

“We do not have an estimate, but it can happen,” Nicola Mai told reporters on Wednesday, without giving details on the timing of the tightening of spread between German and Italian 10-year government bond yield.

Italian bond yields have tumbled after the right-wing League failed to overturn decades of leftist rule in the northern region of Emilia-Romagna in Sunday’s election, pushing the Italian/German yield spread, a measure of the premium investors demand to hold Italian risk, to around 140 basis points .

Mai added that both “political risks and growth problems remain” in Italy.

California-based PIMCO, with $1.9 trillion of assets under management as of Sept. 30, 2019 is the world’s largest fixed-income investor. (Reporting by Giancarlo Navach, writing by Giulia Segreti; editing by James Mackenzie)

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