The rating agency Moody’s has threatened to downgrade the country’s credit rating to junk. That weighed on Italian bonds.
(Photo: AP)
Frankfurt It could have been worse for the Italian bond market. The situation has calmed down almost seven weeks after the election of the new government under the extreme right-wing Prime Minister Georgia Meloni.
At just under 4.2 percent, the yield on the ten-year Italian government bond is well below the level of almost five percent shortly after Meloni’s election.
Investors had been selling Italian government bonds on a large scale since the government coalition led by former ECB boss Mario Draghi was about to break up in the summer. In contrast to the falling bond prices, yields and thus the refinancing costs of the already highly indebted Italian state rose.
At the same time, yield spreads on 10-year Italian bonds versus German Bunds widened – to as much as 2.5 percentage points, the highest level since May 2020.
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