UPDATE 1-Italy sees strong 15-yr BTP bond orders in new year debt sale

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MILAN, Jan 5 (Reuters) – Italy got strong orders for its first syndicated bond issue of 2021, taking advantage of a solid market for euro zone borrowers as investors bet on aid from the European Central Bank and the European Union’s Recovery Fund.

The Treasury will sell 10 billion euros ($12 billion) worth of a new 15-year BTP bond, for which it took in orders of over 105 billion euros, the highest-ever demand for an Italian 15-year syndicated issue.

It’s the latest new syndicated debt sale by sovereign issuers including Ireland and Slovenia on Tuesday.

Luca Falco, Head of Capital Markets at UniCredit, said demand was “absolutely satisfactory” especially considering the issue took place in the very first days of the year.

“We saw strong demand not only from Italy and the UK but also from France and Germany,” he said, noting continued interest for Italy’s government bonds.

A Treasury source told Reuters that the appeal of bonds with a 15-year maturity was growing, with investors seeing them as a good alternative to the traditional, coveted 10-year ones.

The Treasury’s bond issuances in 2020 were at nearly 551 billion euros and expectations for 2021 are roughly in line with last year.

The country’s borrowing costs have floated around record lows since the end of the summer, after the EU agreed on funds to help the bloc’s recovery and the ECB continued its asset-purchase programmes.

The Treasury has set the yield for the new issue, which matures on March 1, 2037, at 8 basis points over the 1.45% March 2036 BTP bond yield, below the initial guidance of around 13 basis points.

The 10 billion euros worth will be issued at a re-offer price of 99.409, equivalent to a 0.992% gross annual yield.

The 2036 BTP bond is Italy’s current 15-year benchmark, which Rome sold last February in a syndicated sale, raising orders for more than 50 billion euros.

Barclays Bank Ireland PLC, HSBC Continental Europe, Morgan Stanley Europe SE, Société Générale Inv. Banking and UniCredit are joint lead managers for the issue.

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