BTp: auction yields soar to a three-year high
The five-year bond yielded 4.08 per cent (+63 basis points), whilst the ten-year bond yielded 4.58 per cent (+49 basis points)
Key points
Rising oil prices, rising inflation and expectations of further interest rate rises by the ECB are also having an impact on the auctions in which the Treasury has placed BTPs. Yields at the auction of 5- and 10-year government bonds have, in fact, risen to their highest levels in the last three years, reflecting the upward trend already seen on the secondary markets.
Auctions are becoming increasingly costly for the Treasury
Bonds totalling 8 billion were placed. Specifically, the first tranche of the new 5-year benchmark BTp maturing on 1 February 2032 was allocated for 3.5 billion, with a yield up by as much as 63 basis points compared with the previous auction to 4.0 per cent – a record high since October 2023. Demand totalled 5.389 billion, resulting in a bid-to-cover ratio of 1.54.
The third tranche of the 10-year BTp maturing on 1 October 2036 was then allotted for 3 billion, with a yield that rose by 49 basis points to 4.58%, again reaching its highest level since October 2023.
Demand totalled 4.678 billion, with a coverage ratio of 1.56. The ninth tranche of the CcTeu maturing on 15 April 2036 was finally placed for 1.5 billion, with a yield of 3.38 per cent. Demand stood at 2.617 billion, with a coverage ratio of 1.75.
Misery loves company...
Today’s figures come against a backdrop of rising bond yields, which are hitting new multi-decade highs for long-term maturities: the US 10-year bond has reached 5.24 per cent, a level not seen since 2007, whilst the German Bund has reached 3.65 per cent, a level not seen since 2009.
