Spread Betting on Italian Bonds
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There's been a large increase in secondary market liquidity for Italian bonds and as a result IG Index is letting clients spread bet on Italian Bonds.
Italian bonds are known as Buoni del Tesoro Poliennali (BTP). The new offering for IG Index account holders complements the existing bonds and interest rates markets that are already being quoted by the firm. IG already offers treasuries such as UK, US, German and Japanese bonds.
Spread Betting on Italian Bonds
IG Index's Chief Market Strategist, David Jones, said, "Historically, bond yields across all of the Eurozone sovereign debt instruments were similar. German bonds were seen as the benchmark.
"Nevertheless, over the last year there's been a decoupling of this relationship. As a result the heavily traded BUND and BOBL are no longer a reasonable proxy for other Eurozone-based sovereign bonds.
"The upshot is that there's been a large increase in the volumes traded in the underlying market for instruments like Italy's BTPs.
"With this liquid underlying market, combined with the current levels of volatility and a steady flow of news that has the ability to move the bonds spread betting markets, there's the potential for BTPs to be rather popular. Particularly with those already spread betting on bonds and interest rates."
Jones added, "In the past, fixed income markets have been felt to be too slow moving to be of much interest to most spread bettors.
"However, ratings agencies, central bankers and politicians now all have the potential to shift the various Eurozone bond markets. There's also the threat of a sovereign default.
"With all these influences creating increasing levels of volatility, the popularity of instruments such as bonds issued by Italy will continue to increase."
Italian Bonds Spread Betting
Looking in more detail, IG Index is offering Long-Term Euro-BTP (BTP) futures contracts. Settlement prices will be as determined by Eurex.
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Risk Warning: Financial Spread Trading and CFDs carry a high level of risk to your capital. You may lose more than your initial investment. They may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
Article provided / approved by IG Index which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 114059.
'Spread Betting on Italian Bonds' edited by DB, updated 21-Jul-11
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