MNI INTERVIEW2: Italy Green Bonds Could Be 10-Year-Plus

Italy's Green Bonds expected to be sold in the next few months have a good chance of bearing a maturity of more than 10 years, Deputy Finance Minister Antonio Misiani told MNI on Friday.

"We are working on an issuance in the coming months. It is a complex process, involving not only the finance ministry but other ministries," Misiani said in an interview, adding that the standards to qualify the bonds as green will soon be fixed by an interministerial committee.

"Depending on the success of the first issuance, we will decide if we carry out another during 2021," he said, adding that green bonds are key to government targets for a sustainable, decarbonised economy.

BTP FUTURA

Issuance of BTP Italia inflation-linked bonds is "unlikely" this year, Misiani said, but there should be "at least" one BTP Futura sale, following a successful auction in 2020.

"The idea is to offer to Italian savers and families the possibility of participating in the recovery of the country," the deputy minister said.

Asked about possible issuance in U.S. dollars, Misiani said Italy wants to "increase the base of investors but at a sustainable cost in line with that of the domestic securities."

"Since 2019 we have a commitment to a presence [in the dollar market], so at least one issuance will always be guaranteed. In 2020 we made only one, precisely because the cost was a few basis points above the BTPs, even if the issuance went very well," he said.

Italy sold a record EUR552 billion in bonds in 2020, supported by European Central Bank asset purchase programmes, which Misiani said will also "help a lot to manage Italian public debt" in 2021.

GROWTH KEY TO SUSTAINABILITY

Average maturities increased from 6.87 years in 2019 to 6.95 in 2020, while the average rate for new bond sales fell from 0.93% to 0.59%.

Italy's public debt should be close to 160% of GDP at the end of 2020, Misiani said, but added that the government will continue with "expansive fiscal policy" in line with recommendations from the ECB and other supranational institutions.

While new measures in response to the Covid pandemic will be approved this month, the fiscal focus is shifting to mid- to long-term economic development, he said. Boosting growth will be key to Italy's debt sustainability, he added, with a key contribution coming from NextGenerationEU funds.

But Italy wants to revise the EU's Stability and Growth Pact, which set strict fiscal and debt targets for eurozone countries.

"Rules are indispensable but should be different to the ones before Covid," Misiani said.

Talk, though, of cancelling Italy's debts is merely an "academic debate that is interesting in the abstract level, but not feasible in the reality" due to international rules and treaties, he said.