MNI INTERVIEW: Italy Sees Net Borrowing Similar To 2020 Level

Italy's 2021 net cash borrowing requirements for 2021 could be in the region of EUR140-145 billion, similar to 2020 levels, while redemptions should be EUR222 billion, the Treasury's general director of Public Debt Davide Iacovoni told MNI, adding that the government's 2021 economic outlook may be revised to be slightly lower.

These numbers are still under revision, as they could be significantly affected by the delivery of the first tranche of the NextGenEu Covid aid package, whose timing is still uncertain together with payments from the EU's SURE unemployment scheme, as well as by Italy's economic and fiscal performance, Iacovoni said in an interview.

Official cash borrowing requirements will be updated together with budget documents to be published at the beginning of April, he said. These documents will also contain an updated economic outlook, which could be revised lower.

"It is clear that different waves of the pandemic have been stronger than expected," said Iacovoni, saying it was still difficult to provide an estimate.

BOND YIELDS

Asked about the impact of rising bond yields on Italy's long-dated debt strategy, Iacovoni said that Italy's debt management will remain unchanged and pointed out that Italian rates continued to be very low from an historical perspective.

"It is true that in the last two or three weeks we have seen some rising rates, but we are still living with very low rates for us," he stressed. Italy's long-dated bond strategy is not normally driven by the absolute level of rates, he said.

"We are strongly impelled to spread out our very high load of redemptions over time. And the main way to do that is by having a strong presence on long-dated paper. This is something we have to do structurally for our debt management," Iacovoni said, noting that it still convenient to lock in borrowing at low rate levels.