The BTP Bund spread stabilized at around 97 points, which began to descend in a climate of confidence on the positive outcome of the consultations launched by Mario Draghi to form a new government after various political forces have already guaranteed their support. The yield differential between the ten-year benchmark BTp and the same German maturity, after opening at the threshold of 100 basis points (99 points the closing on Thursday), ended the session near the minimum of the day at 93 basis points: a level which has not been seen since December 2015 (here the spread trend in real time). On Thursday, the health index of Italian public debt broke the 100-point threshold downwards, to levels it hadn’t touched since December 2015.
Milan stock exchange the best in Europe
Positive closing even if below the session highs for Business Square, in a day that has seen Frankfurt black jersey in Europe with industrial orders in Germany down 1.9% compared to November, after seven months of rise and doing worse than expected. The Ftse Mib gained 0.81% when the Dax30 closed almost unchanged (-0.02%), after the data on orders to industry. TO Paris the Cac40 finished up 0.90%. The week in general ends with the same positive atmosphere that characterized it in the other sessions. In Italy, attention remains high on the consultations of the designated president Mario Draghi. Meanwhile, after the record set on the eve, Wall Street continues to rise slightly, partially held back by data on the labor market.
The banks still drag Piazza Affari
Among the titles, in Piazza Affari, day as protagonists for banks: Bper finished in the lead with a 4.7% progress, Intesa Sanpaolo (+ 2.6%) also did well, after the dissemination of the 2020 results, and Unicredit (+ 2.17%), with the designated president Pier Carlo Padoan who declared in an interview that Unicredit wants to grow, without excluding operations for external lines.
Where will the spread go? Potential savings of 1.5 billion
But the Draghi effect, which in 2 days has already reduced the spread between ten-year BTPs and German Bunds by about 20 points, bringing it to a minimum in 5 years, could cause the differential to reach 70 points, a level close to that of the Spanish bonos. Andrea Delitala, analyst of Pictet Asset Management, and Michele Morra, Portfolio Manager of Moneyfarm argue, according to whom such a scissor cut could allow Italy to save around 1.5 billion euros per year on the interest to be paid on the public debt.
The formation of a government led by Draghi – explained Delitala to Ansa – is worth in our opinion a narrowing of the spread of 20/25 basis points. The announcement effect and Thursday’s progress have already caused a squeeze of 15 basis points between Wednesday and Thursday. A further compression of 20 basis points would be possible on the projects presented and approved by the European Commission together with credible structural reforms on public administration, pensions and justice presented in the coming months. The differential against the Bund could thus compress from the current 100 basis points to 70 basis points, not far from that between the Bund and the Spanish Bonos. In addition to the savings on interest already accrued throughout the downward phase of global yields that allows us to issue today at average rates (between Bot CCT, BTP, etc.) close to 0%, well below the average cost of our previous debt (about 2.5%), a further narrowing of the spread of about 50 basis points, worth every year, a further saving quantifiable in about 1.5 billion euros.