Products of bond market in Italy

PRESENTATION BY AKASH PAUL LAKRA Roll 766, BBA(H) LLB(H), National Law University, Jodhpur

The environment in which the issuance and trading of debt securities occurs. The bond market primarily includes government-issued securities and corporate debt securities, and facilitates the transfer of capital from savers to the issuers or organizations requiring capital for government projects, business expansions and on going operations.

Issuance and Trading of debt securities

Includes government-issued securities and corporate debt securities

Facilitates the transfer of capital

Data Source: Definition of Bond Market, INVESTOPEDIA, http://www.investopedia.com/terms/b/bondmarket.asp

Characteristics of Bonds

Risks of Bonds

Bond Yields

Data Source: 5 Basic Things To Know About Bonds, INVESTOPEDIA, http://www.investopedia.com/articles/bonds/08/bond-market-basics.asp

Bond Rating

Maturity Bond is Secured or Unsecured

Liquidation Preference

Data Source: 5 Basic Things To Know About Bonds, INVESTOPEDIA, http://www.investopedia.com/articles/bonds/08/bond-market-basics.asp

Coupon

Tax Status Callability

Data Source: Types of Bonds, amfe Finance for Europe, http://investinginbonds.eu/pages/learnaboutbonds.aspx?id=6274

Italian Government Bonds are issued by the Dipartimento del Tesoro

Careful Short Term Investment Zero Coupon Bonds

Allow investors to put some money Zero Coupon Bonds

24 months maturity, with deep discount

Italian Treasury bonds Straight Bonds

Some BTPs are Strippable

Italian Treasury bonds Steady return in real terms Semi Annual Coupons

Principal of the notes and their coupons, payable semi annually, take into account rates of inflation in the Euro-zone as measured by the Eurostat index Harmonised Index of Consumer Prices (HICP), excluding tobacco. At the notes’ maturity, holders of these bonds are compensated for any loss in purchasing power that has occurred over the term of the notes.

Floating rate securities that have a 7 year maturity Semi Annual Coupons

Standard & Poor's downgrades Italy's biggest banks. – Reuters

S&P cut Italy's rating by one notch to BBB and left its outlook negative, citing the country's weak economic prospects and impaired monetary policy transmission within the euro zone. – RTE News

Italy’s projecting economic growth to contract 1.9 percent this year, compared with the Italian government's forecast for a 1.3-percent fall in output. – Reuters

The Euro Zone Crisis has affect the Italian Bond Market gravely

Two-thirds of Italian debt is held by a relatively diverse base of local investors, which tend to hold onto its bonds – RTE News

Italy's economy, the euro zone's third largest, has been one of the most sluggish in the world for over a decade, held back by low competitiveness, a weak political system and a public debt of more than 130% of gross domestic product.