Italy raises 22.3 bln euros from new BTP Italia bond

ROME/MILAN, May 21 (Reuters) — Italy raised a record 22.3 billion euros ($24.5 billion) from a BTP Italia inflation-linked bond targeted at retail investors this week, outperforming the last such issue in October and exceeding the already high expectations for the new note.

Proceeds from the sale are aimed at offsetting the impact of the COVID-19 crisis on the economy.

Italy’s public debt is expected to expand while economic output contracts as much as 13% this year, based on the Bank of Italy’s worst-case projection.

Institutional investors bought 8.3 billion euros of the note, which matures in May 2025, with orders coming in for around 19.5 billion euros, bourse data showed.

Earlier on Thursday, the Treasury said it was keeping unchanged at 1.4% the real coupon on the bond, after the issue raised more than 14 billion euros from small savers in three days.

Italy’s Treasury introduced «BTP Italia» bonds at the height of the euro zone debt crisis in 2012 to tap domestic private wealth, offering a generous coupon on top of the nationwide rate of inflation.

They were relaunched by the Treasury to increase the amount of government bonds in the hands of retail investors and to widen its funding sources, shifting part of the burden away from Italian banks, which are still recovering from the last financial crisis.

The October 2019 issue, with a maturity of eight years, raised a total of 6.75 billion euros — almost a third of what was placed with the latest issue.

Of the total amount in the October placement, 2.99 billion euros was bought by small savers. ($1 = 0.9118 euros) (Reporting by Sara Rossi and Alessia Pe in Milan and Antonella Cinelli in Rome; Writing by Giulia Segreti and Alessia Pe; Editing by Hugh Lawson)