Italian Treasury issues 7 billion euros in BTPs at multi-year high yields

The Italian Treasury has successfully placed 7 billion euros worth of BTPs (Buoni del Tesoro Poliennali) at yields reaching their highest levels since 2023. The auction covered three maturities: three, seven, and fifteen years, with demand significantly exceeding supply. The three-year BTP yielded 3.69%, the seven-year at 4.24%, and the fifteen-year at 4.84%.

Despite these higher nominal yields, inflation is impacting real returns for savers. With Italian inflation estimated at 4.2% for September, the real net yield on the ten-year BTP has fallen into negative territory at -0.22% after accounting for taxes and inflation.

In terms of market spreads, the gap between Italian BTPs and German Bunds rose to 108.6 basis points. Conversely, the spread between BTPs and French OATs decreased to -28.8 basis points, indicating that the market is currently demanding a higher risk premium for French debt than for Italian debt.