Anno Accademico 2009-2010 Scienza delle Finanze Prof. Giuseppe Eusepi Lezione n. 33
26/5/2010
Dott. Fabrizio Tesseri
La gestione del debito pubblico in Italia
Anno Accademico 2009-2010 Scienza delle Finanze Prof. Giuseppe Eusepi Lezione n. 33
26/5/2010
Dott. Fabrizio Tesseri
La gestione del debito pubblico in Italia
Italy’s Debt Management Fabrizio Tesseri
Italy’s Ministry of Economy and Finance (MEF)
Public Debt, Department of the Treasury
* Italian government bond structure Average Life of Government Debt 7.07 GOVERNMENT DEBT: BREAKDOWN BY INSTRUMENT AS OF 30 APRIL 2010 Bonds Amount (mln €) % BOTs 149,127.64 9.97% Flexible BOTs - 0.00% CCTs 161,553.81 10.80% CTZs 68,338.01 4.57% BTPs 936,609.46 62.61% BTPs€i 108,947.56 7.28% Foreign Debt EMU Currency 68,822.65 4.60% of which ISPA 9,534.95 0.64% Foreign Debt nonEMU Currency 1,689.82 0.11% Atypical BTPs 740.50 0.05% Total Amount 1,495,829.45 100.00% Source: MEF
Despite the crisis, Republic of Italy has gone on with its key goals in managing public debt: increase of fix rate and duration lengthening have been keeping at their strategic role in the indebtedness policy. * Evolution of the debt composition . . . . . Source: MEF
…… duration and average life
* Average life and duration have lengthened, respectively, from 6.77 and 4.40 in 2006 to 7.07 and 4.87 in April 2010. Source: MEF
* The reduction of risks has been achieved without impairing the efficiency of debt funding The Treasury manages its debt in order to keep the cost of funding under control: despite the different interest rate cycles, since 2003 the interest burden of the General Government has always been within the range of [4,5%-5,1%] of GDP. Source: MEF
* Bond redemption profile data source: MEF
* Source: MEF 2010 2011
Composition of Foreign Debt (4.85% of the total outstanding) As of 31st March 2010 Source: MEF *
* Fly to quality effects on Italian bonds
* Spread widening in the Euro-Zone
* Spread widening in the Euro-Zone
* Spread widening in the Euro-Zone
A cross country comparison of public/private debt ratios in terms of GDP (2008 vs. 2010p)
Source: Eurostat *
Increasing Public Debt
* Starting from Lehman default, many European countries faced a big challenge in financing the measures adopted to support national banking systems (Italy really marginally). Concerns about of Governments’ capability of financing public deficits appeared not justified, also thanks to the large liquidity, favoured by Central Banks quantitative easing. Marketable Central Government Debt 2010 data source: MEF processing from official forecasts
Modification in issuance policies
* In 2009, the issuance of T-bills recorded an unprecedented pick, generally shortening the duration of public debts and increasing the roll over risk. Italy, again represented an exception. 2010 data source: MEF processing from official forecasts
Issuance strategy for 2010 Given the gradual improvement of market conditions at a general level and for the Italian debt, issuance activity will continue to rely on principles of regularity, transparency and predictability that have characterized the Italian Treasury issuance policy in the last decade, in order to assure liquidity to both on-the-run and off-the-run bonds.
Throughout the year, the Treasury will stick to the regular issuance of on-the-run but keeping also the flexibility to offer also off-the-run bonds (as carried out in 2008 and 2009), in addition to on-the-runs, to cope with market needs and potential upsurges of volatility on the market.
The new method of auction for medium-long term bonds, adopted since October 2008 and based on a discretional price setting within a preannounced supply range, will continue to be used throughout the year for medium-long term bonds (both nominal and inflation-linked).
As in the previous years new long term nominal bonds and inflation-linked bonds will be launched via syndication. This issuance method has proved to be very effective in bringing a broad basis of qualitative investors in the primary market, in enhancing the liquidity of the security and in providing more flexibility to issuer in terms of timing of issuance. *
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