LONDON – The spasmodic search for returns on the investment categories deemed safer had a real doping effect on the government bonds of Italy and Greece. The Financial Times reports, with an article entitled “Steroid Bund”, inspired by an expression coined by an analyst, Antoine Bouvet of Ing: BTPs and Hellenic bonds “are exchanged a bit as if they were Bund on steroids – he says – they are safe stocks but with a little more performance ». Precisely these appetites for yield led to further easing of wage rates and spreads, the yield differential of Italian and other eurozone securities compared to German ones, taken as a reference for issues in the currency area.
Ten-year BTP yields were stable at 0.90 percent this morning, with a spread of 132 basis points over the German Bund. Solid demand levels have been recorded in the latest auctions on Italian securities of various maturities. The FT cites in particular the placement of the last 15-year BTP on which 50 billions of applications have accumulated against a 9 billion euro offer.
Also effect of the coronavirus emergency
There are even those who, like Robert Tipp of the Ing bank, expect to return to the pre-crisis picture of debt, in which the spreads between eurozone government bonds were at a glance. This flattening was accentuated by the coronavirus emergency, which triggered an escape from risk and investment outflows from segments such as equities towards safer shores, such as public securities (or gold).
However, the FT also cites those who urge caution, such as Unicredit's Chiara Cremonesi, according to whom a return of volatility on the BTPs could always be recreated due to political uncertainties in the Peninsula. While according to Ian Stealey, head of investment at JPMorgan Asset Management, the rush to buy could reverse if the fallout of the coronavirus were to degenerate into an economic downturn.