Commerzbank Warn Of Mixed Blessings Surrounding Strong BTP Valore Demand

Commerzbank note that “the latest BTP spread re-widening continues with the 10-Year spread (vs. Bunds) apparently rejecting 175bp, the lower end of the recent range. This comes despite the success of the BTP Valore, which has already generated total volume of €14.8bn during the first days. This is more than all the retail subscription phases of BTPs Futura and Italia have delivered. The Tesoro did not make use of its early closing option after three days and flagged more Valore issuance for this year. While this will take some pressure off BTP funding, for the overall market it could be a mixed blessing as banks are facing competition for their deposits and may in turn reduce BTP holdings as TLTROs mature.”