Halister News

(Bloomberg) -- Even in the context of the broader government bond sell-off, the recent weakness in Italian BTPs is “eye-catching”, Goldman Sachs analysts, including Francesco Garzarelli, write in a client note.

• The underperformance of Italian BTPs versus Spanish Bonos triggered by investors’ assessment of the diverging political risk in the two countries
• The unexpected outcome of the U.K. vote could have amplified anxieties around the Italian referendum on constitutional reform scheduled December 4
• The likelihood of a rejection of the reform by the Italian electorate has increased in recent weeks, increasing the risks of a weakened government and of political turmoil
• Factoring in ECB policy expectations, Goldman expects that Italian BTPs will end the year around current levels, with bund yields somewhat higher

• NOTE: DBRS has extended its review of Italy’s sovereign ratings until the results of the Dec. 4 constitutional referendum are known, the ratings company said Thursday

• NOTE: A poll published by Corriere della Sera Thursday shows that the ‘No’ vote leads with 39%, ’Yes’ vote at 37.5%; undecided 23.5%