MNI: Rollovers Seen Saving Italy EUR6-10 Bln In 2026

The Italian government expects structurally lower yields for its sovereign bonds to reduce its debt servicing costs by EUR6-10 billion in 2026, while its issuance of medium- to long-term securities should total between EUR350-365 billion, sources familiar with the matter told MNI.

While these issuance levels would be slightly below the levels of 2025, they would remain elevated by historical standards, a source noted, pointing to official public debt guidelines published in December.

The reduction in interest expenses will be tied to cost savings from refinancing obligations at current lower yields rather than to any structural reduction in the debt stock over a longer horizon, the source added. (See MNI: Italy To Increase Funds For Investment In Budget Update)

The debt guidelines showed that around EUR256 billion of medium- and long-term debt is set to mature this year, alongside an estimated net borrowing requirement of roughly EUR125 billion.

STRUCTURAL IMPROVEMENT

Italian officials are increasingly confident that the compression of the spread over bunds, which has fallen to around 70 basis points for the 10-year tenor from 130 over the past year, is structural rather than a response to external market factors.

Savings on yields should be in the range of EUR 6-10 billion for 2026, but sources stressed that the final number will depend on market conditions. Italy will maintain a flexible issuance strategy, adjusting auction sizes and maturity composition in line with its strategy of recent years.

Sources also noted that the concentration of redemptions in 2026 amplifies the budgetary sensitivity to refinancing rates, so this year will be particularly exposed to both favourable and adverse shifts in market pricing.

Interest costs are accounted for on an annual cash-flow basis, meaning any easing in debt-servicing costs is reflected in the year of issuance, regardless of the maturities of the bonds sold, one official said.