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Italy plans to issue more foreign currency bonds next year

* Head of debt management outlines plans for retail bond

* Says has met over 80% of medium/long term funding goal

* Says will issue more U.S. global dollar bonds in 2020 (Adds dates of new BTP Italia bond)

By Giuseppe Fonte

ROME, Oct 10 (Reuters) – Italy plans to sell more debt denominated in foreign currencies next year after demand for its first U.S. dollar bond in nearly a decade exceeded expectations, the head of debt management at the Treasury said.

Italy’s first U.S. dollar bond since 2010 drew more than $18 billion in orders this week, allowing the Treasury to raise $7 billion and helping to diversify funding sources for the heavily indebted state.

Davide Iacovoni told Reuters in an interview the Treasury aimed to sell more global bonds in U.S. dollars next year and privately place debt denominated in yen and other non-euro currencies.

“Our goal is to be present on the U.S. dollar market on a regular basis and we’d like to resume our global bond programme. We expect to be able to tap this market again with new issues next year,” he said.

This week’s 10-year dollar bond yielded 2.98%, but Iacovoni said that if it were priced in euros the yield would be broadly in line with the current yield on Italy’s benchmark 10-year BTP bonds.

Italy has already met more than 80% of its 2019 funding goal of 240 billion euros ($264 billion) for medium and long-term bonds, the debt management chief said.

He added that before the end of the year the Treasury would issue a new BTP Italia bond linked to Italy’s inflation rate and aimed at retail investors.

The bond will have an 8-year maturity, compared with the 4-year maturity on the previous retail bond issued in November last year.

It will be issued over three days, two of which will be dedicated to retail investors and one for institutions. The coupon will be set after the retail part of the sale “to give certainty to the institutional investors,” Iacovoni said.

The treasury said in a later statement the new BTP Italia bond would be issued on Oct. 21-23.

Italy cancelled its usual spring issuance of this type of bond due to fears of weak demand, but since then yields on Italian bonds have plunged thanks to the arrival of a new, more pro-European government and the European Central Bank’s plans for more monetary stimulus.

Iacovoni said he did not expect other banks to withdraw from acting as primary dealers of Italian debt, after ING pulled out earlier this month.

The Treasury has received some expressions of interest to join the current group of 16 primary dealers, which has gradually dwindled from 23 in 2008.

($1 = 0.9088 euros) (Reporting by Giuseppe Fonte; Writing by Valentina Za and Gavin Jones; Editing by Mark Potter)


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