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Italy to offer €8 bn in T-bills: the reduction of the stock of BOTs continues

by Claudio Celio

Net borrowing for BoT in 2014 on monthly basis

In million of euro. January includes the settlement of the December 2013 6m T-bill auction

(Source: Ministry of Finance and Italy24)

The Italian Treasury will launch the first debt issue of the fourth quarter on Oct. 10 with €8 billion of 12 moth T-bills, or Buoni ordinari del Tesoro (BOT), on offer.

This will be the latest case in which it will be reducing the amount of this type of debt instrument in circulation, since the upcoming issue will be replacing €9.78 billion of expiring BOT.

In the first nine months of the year, the Treasury reduced the issues of debt with maturities of six to 12 months. Net BOT issues came to a negative €3.27 billion.

After the first quarter, which saw €3.37 billion in net positive issues, it put on the brakes in the second quarter, reducing net issues by €1.86 billion.

In the second quarter, the reduction was even more pronounced at €4.77 billion.

The reduction of issues of short-term debt like BOT is in line with the debt program announced by the Treasury at the beginning of the year.

In the document detailing the program, it foresaw fewer BOT issues for the year than those for 2013 due to an improvement in the country's public finances and a strategy to prolong the maturities of public debt.

Since the beginning of the year, BOT yields have come down, hitting month after month a historic lows. The rate for six-month maturities went down from 0.590% in January to a record 0.136% in August. The annual yield for BOTs have also gone down from 0.735% in January to 0.271% in September.

Since January, the Treasury has issued €149.22 billion in BOT, a lower amount than the €152.48 billion of expiring debt.

In 2013, BOT issues were negative for about €10 billion.