Two weeks ago, Italy completed the sale of €22.297bn in government debt (BTPs Italia 🇮🇹), breaking the previous record set in November 2013, when €22.271bn were raised
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There are tree main reasons behind the record issuance:
1⃣ attractive financial terms;
2⃣ Merkel-Macron plan announced with perfect timing (2nd day of placement);
3⃣ the impact nature of the issuance (expressively COVID-related).
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1⃣ attractive financial terms;
2⃣ Merkel-Macron plan announced with perfect timing (2nd day of placement);
3⃣ the impact nature of the issuance (expressively COVID-related).
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It is generally not advisable for a country to rely on 1⃣ (it's expensive) or 2⃣ (it's unpredictable). However, issuing debt with a clear commitment to finance specific policies does provide some food for thought.
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More than ever, it is important for retail investors to know what their investments will finance and what sort of impact they will generate. This trend is observed especially among millennials and in connection with sustainability.
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This is the reason why working to
> issue sovereign green bonds
> and define a proper legal framework with sub-sovereign entitities to allow them structure social impact bonds
should be a priority for the Italian government.
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> issue sovereign green bonds
> and define a proper legal framework with sub-sovereign entitities to allow them structure social impact bonds
should be a priority for the Italian government.
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Whereas SIBs still represent a niche market and little evidence is available on the financial convenience for governments, the existence of a beneficial green bonds' yield spread is more documented.
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If the preference leaned towards #greenbonds there would be no need to reinvent the wheel: 🇳🇱 issued a €5.9bn sovereign green bond (@ClimateBonds)
If it were to opt for social impact bonds the upfront work with sub-svrgn entities would bring a valuable first-mover advantage
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If it were to opt for social impact bonds the upfront work with sub-svrgn entities would bring a valuable first-mover advantage
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In any case, as public debt is set to hit €2.6tn this year, keeping an eye on what the younger generation demands is imperative, and may yield positive results in terms of both debt sustainability and larger economic and societal transformation.
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Any feedback very appreciated!
@lucaberga @MazzucatoM @andytuit @LukeAOLeary @GeilanMB @ejamieso @NVJRobins1 @iioannoulbs @bencaldecott @UlfErlandsson @AssaadRazzouk @CampanaleMark @UlfMoslener @AndrewWNewton
@lucaberga @MazzucatoM @andytuit @LukeAOLeary @GeilanMB @ejamieso @NVJRobins1 @iioannoulbs @bencaldecott @UlfErlandsson @AssaadRazzouk @CampanaleMark @UlfMoslener @AndrewWNewton
