Italian Premier Matteo Renzi presents budget plan with Finance Minister Pier Carlo Padoan

Italy’s 50-year bond: an ill omen?

  • Success of Italy’s 50-year bond shows investors see persistent low inflation and growth
  • Longer debt maturities may become more common among weaker eurozone members
  • Trend may reveal monetary, fiscal authorities’ lack of confidence as they offload risk to investors

In early October, the Italian government issued a 50-year bond bearing a coupon close to 3 percent. It was a stunning success. This report considers the possibility that this bond sale is part of a more ambitious strategy pursued by the governments of the eurozone countries as well as by the authorities in Brussels – all of whom are bracing for trouble ahead.

Selling long-term debt shifts at least part of the bill for any future misfortunes to the bondholders, at very little cost. Rather than signaling confidence in a future with no major disruptions, these bond issues reveal that some key institutional players fear the worst. Accordingly, they are now unloading default and inflation risk to investors who are looking for better returns on their fixed-income portfolios.

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Professor Enrico Colombatto
The popularity of very long-term bonds is not a symptom of stability, but a sign that investors are willing to ignore risk
read more about it in the report
What's inside
  • Success of Italy’s 50-year bond shows investors see persistent low inflation and growth
  • Longer debt maturities may become more common among weaker eurozone members
  • Trend may reveal monetary, fiscal authorities’ lack of confidence as they offload risk to investors
Who will benefit?
  • Report is targeted to the decision makers in cross country manufacturing – suppliers, manufacturers, logistics.
  • Also considered useful for the administrative university facilities, to better understand the possibe effects of current decisions.
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