Everyone wants Italian BOTs and BTPs. Success in mid-August auctions despite the fact that politics still does not work (by Claudio Pisapia)
The week of August 15th saw interesting food for thought in the form of Government Bonds. On August 12, the Treasury offered 7 billion in annual BOTs sold at auction at negative interest rates of -0.192%, down from the -0.124% offered in the last issue on July 10. The coverage ratio was 1.74 as the demand was 12.2 billion, so much higher than the supply.
On Thursday 13 August, the Treasury instead offered BTPs with a maturity of 3, 7 and 30 years, for a total amount of 6.75 billion. The coverage ratio was also interesting here and precisely of 1.63, 1.43 and 1.39, again in short, the demand for securities was higher than the supply.
Once again it is demonstrated that Italy has no problems in finding lenders willing to buy its debt, indeed. But in the background of these issues there is still the Recovery Fund and the SURE and, of course, the MES with which we will become indebted sooner or later, also given the new positioning of Mario Monti at the WHO.
Of course we pay a little more on the interest of the BTPs than the Spanish or English but this is due to the fact that Italy has an Investment Grade BBB-, therefore to the fact that the rating agencies, already recognized unable to give serious judgments since 2008 on the quality of their debts, they continue to have more credibility than they deserve.
Rating agencies but also the European Central Bank and coordination with the fiscal policies of countries hinder the correct course of economic events and, consequently, negatively affect citizens' expectations.
Central Banks "expand" their balance sheets and the ECB exceeds 6 thousand billion following the FED which has exceeded 7 thousand. This expansion is mainly due to the purchase policies of sovereign bonds with the aim of injecting liquidity into economic systems in order to increase the spending power of citizens (families and businesses). Purchases that also regulate the spread that remains low when there is the certainty that it will really do it or in case it is needed (memo: Draghi's “whatever it takes”).
Unfortunately, the news still speaks of a recession, a sign that something is not working probably because the currency alone is not enough. There is a need for plans, strategies and unity of purpose especially in the eurozone where monetary policies do not find the necessary support in the fiscal policies of the States, everyone follows their ideas and objectives do not meet. The ECB "produces" money while the states do not control them and do not decide correctly how to use them, probably because there is no clear coordination between the different national policies that tend to protect particular interests rather than those of the community of European citizens.
In short, the debt oscillates between a serious and a false problem because the lenders have always been there, and continue to be there, given that Italy remains a good place to invest (a country is not made up of only politicians who 'discuss' and newspapers that denigrate but also of people who produce, invent, grow). Moreover, investors know that the interests depend on the phony American rating agencies and not really on the possibility of default, so while they buy they smile knowing that we will not replace them with serious European agencies.
Behind (or in front of) the behavior (as well as the Statutes) of central banks remains fundamental, which should be made more dependent on the needs of communities and less on those of the markets. Finally, the community of European states should work seriously for… the community and therefore adjust spending needs (fiscal policy) to common interests rather than worrying about spreads and imposing methods of borrowing that are acceptable to the financial elites.
by Claudio Pisapia
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The article Everyone wants Italian BOTs and BTPs. Success in the mid-August auctions despite the fact that politics still does not work (by Claudio Pisapia) comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/tutti-vogliono-i-bot-e-i-btp-italiani-successo-nelle-aste-di-ferragosto-nonostante-la-politica-continui-a-non-funzionare-di-claudio-pisapia/ on Thu, 20 Aug 2020 07:04:47 +0000.