The falling spread between Italy's
10-year BTP bond and the German Bund is an indication that
investors consider the public debt to be sustainable, Economy
Minister Giancarlo Giorgetti said on Wednesday.
"The data on the spread - which is not the only indicator, but
deserves to be remembered - shows how our debt is considered
reliable," he added.
Last Friday the spread dropped to 125.3 basis points, the lowest
level in over two years.
On market uncertainty over the part-privatisation of Italian
telecom giant TIM, Giorgetti said on the sidelines of question
time that the government had "done what the State must do".
"We have done the only thing possible, and now the market will
assess whether to venture in other directions," he added.
In early March the market reacted nervously to the approval and
subsequent confirmation by TIM of its 2024-2026 business
guidance that includes the sale of its landline grid NetCo to
American fund KKR as part of efforts to bring down its debts,
which currently add up to around 26 billion euros.
On March 7 shares in the company plummeted 24% on the Milan
stock market following the unanimous approval of its 'Free to
Run' plan the day before.
However, CEO Pietro Labriola and advisors told an extraordinary
board meeting the following Sunday that the plan could not be
considered responsible for the crash and could go ahead.
Before the start of Monday trading, TIM then issued a new market
communication saying it expected "its pro-forma net debt, after
the Netco transaction, to be around 7.5 billion euro at the end
of 2024" and "net cash flow to be around zero in 2025 and around
500 million euro in 2026, normalised to 800 million".
The share price subsequently rose by 2.2% to 0.227 euro on early
trading only to fall by 7.7% to 0.20 euro, taking it to December
2022 levels.
Under the NetCo sale transaction that could reach 22 billion
euros, the Italian State is to take a stake of up to 20% in the
grid, which is considered strategic infrastructure.
However, French media group Vivendi, TIM's biggest stakeholder,
is against the sale, claiming the grid is worth much more, and
it has vowed to "use all legal means available" to reverse TIM's
"illegal" decision.
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