Public debt: foreigners within a whisker of a trillion, 32.4% of the total (highest since pre-Covid)

The share of Italian public debt in the portfolios of foreign investors is a whisker away from one thousand billion, a level that will most likely be certified with the data for April or May at the latest. The approximation is photographed by the census released yesterday by the Bank of Italy, and updated at the end of March: in that table, the share of liabilities purchased across borders is calculated at 982.8 billion euro, i.e. 18.2 billion more than the previous month. A similar increase in April is enough to break through the 1,000 billion mark. And this is not, it must be said at once, bad news.

In March, as the latest statistics from Via Nazionale explain, international investors had returned to hold 32.4% of Italy's public debt, a share not seen since February 2020, in the days when Italy's first patients fell ill with that Covid that in the following weeks would overwhelm the country's public finances as well as its healthcare structures. Since then, the foreign slice in the growing cake of Italian debt had begun to shrink to the 26.2% touched in March 2023, the lowest level since December 1998. From there, the ascent began.

Beyond the battle between domestic investors and the rest of the world that animates some political narratives, on a practical level, the international pillar is the essential component in the post-pandemic normalisation of Italian debt, which also passes through the constant decline (in absolute as well as percentage terms) of the securities held by Bankitalia, cut month by month by the quantitative tightening implemented by the Eurosystem. In this case, the numbers are updated to April, when the total public debt came to 3,063.5 billion, with a monthly increase of 30.1 billion, fuelled by the needs of the Public Administrations (21.5 billion), by the increase in Treasury liquid assets (+7.2 billion) and by other marginal factors (+1.4 billion) represented by issue discounts and premiums, revaluation of index-linked securities, and exchange rate changes. In that month, the Central Bank held 20.2% of Italian liabilities, the lowest since August 2020.

These trends, barring surprises, are set to continue. The boost provided by the record-breaking demand gathered in recent months by syndicated issues (the last one on 4 June) actually consolidates a more general dynamic, in which international interest in Italian bonds is fuelled by the strengthening of the creditworthiness certified by rating agencies and by yields which, due to the high level of debt, remain higher than those offered by other European issuers, even if the spreads are all narrowing (yesterday the ten-year bond fell to 3.46%, from 3.49% on Friday, with the spread at 93.9, i.e. 1.4 points below the end of last week). And Italian savers? Their share in March fell by one decimal place, to 14.3%, in an underlying stability that has lasted for over a year: a sign, of course, that the absolute values in the portfolios of households and domestic non-financial companies are growing (+24.8 billion in a year) at a similar pace to that held by public debt.