“Did you win the lottery?” the sprightly pensioner asks the friendly couple, amazed and with a hint of envy. Oh wow, the friend rejoices happily. She and her husband fulfill their dream of going on a cruise not by taking part in a game of chance, but rather by making a patriotic investment. In the Italian Ministry of Finance’s commercial, the fictional couple bought their new bonds for small savers from the state. The fabulous message of the advertising film: Anyone who lends money to the cash-strapped Italian state will soon be setting off on a cruise. Dream ship ahoy!
With his investment tip, Rome’s finance minister is trying to bring a government bond specifically designed for Italian private investors to the people this week. The tempting marketing campaign has been rolling around the country for days. The 30-second spots flicker across all TV channels. Reputable newspapers and leading digital information providers are actively promoting the so-called BTP Valore. The aim of the campaign: Giancarlo Giorgetti, who has to ensure the ongoing refinancing of 2.85 trillion euros of Roman debt, should in future place as large a share of government bonds as possible in Italian hands.
The right-wing populist government in Rome has been pursuing a nationalist financial strategy for a year. It would like to escape as much as possible from the pressure of fluctuating sentiment on the international financial markets. Because when investors abroad become nervous and demand higher interest rates for Italian debt securities, they immediately suspect that evil speculators are at work in Rome. As early as 2023, Giorgetti managed to raise more than 35 billion euros with the first two editions of the patriotic BTP Valore. His loan is well received.
But can a finance minister lure buyers of a relatively safe investment product, which also includes Italian government bonds, with a cruise? Now Giorgetti’s job is not to be envied. In 2024 he will have to find buyers for 415 billion euros of government bonds with longer maturities. Of this, 42 billion euros come onto the market from the European Central Bank alone. After the trillion-dollar purchase programs expire, other investors now have to step in for the ECB. So Giorgetti needs more customers than ever.
3.77 percent yield for the six-year bond
It is also clear that if someone needs to raise as much money as urgently as the finance minister in Rome, then he is trying to put on a big show. So the crippling debts that have weighed on the low-growth country for decades now suddenly promise the Italians private cruise luxury.
That’s not entirely fair. The Ministry of Finance offers a total yield of 3.77 percent for the bond with a term of six years. That’s not bad, but you can’t make big leaps with it. From the quarterly interest on the current account, the sought-after small investors can usually only afford a short boat trip along the coast. Or take a pedal boat across Lake Trasimeno.
The question inevitably arises: Isn’t the man who is now responsible for Italy’s gigantic national debt not misleading people badly? In any case, the Italians cannot expect to win the lottery.