The case for Italian Government Bonds

During the month of October, we were all reminded that markets don’t always go up and we can actually face periods of high volatility. In a situation when markets are looking riskier and more uncertain, investors generally flock to safe havens like gold, bonds and cash instruments.

An interesting investment opportunity we are currently monitoring is towards Italian Government Bonds.

I already wrote an article whereby in my opinion, the fear which is being mounted on the fact that Italian debt is unsustainable and we might have a eurozone breakup is an exaggeration.

The Euro zone ‘breakup’ risk, which had soared at the height of the sovereign debt crisis in 2011/2012, has subsided since France elected centrist Emmanuel Macron as president last year and euro sceptic movements did not gain the required majority in their national parliaments. Moreover, Italy’s new government has more than once re-iterated that they fully intended to remain in the EU and the euro-zone.

Attractive Yield

Italy offers some of the highest yields of European government bonds at nearly 3.5% for 10-year maturities. That compares with Portuguese and Spanish 10-year debt currently yielding 1.9 % and 1.6% respectively.

Important to mention that the country is still in the investment grade space (rated BBB by S&P), therefore the probability of default is very low.

Would you like to know more why Italian bonds offer opportunity in this environment and which are the ones that are more interesting? Click here to purchase our latest Investment Research Report which has just been updated.

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