122 billion euros of Italian debt to be refinanced in 2013

Government crisis could spark new debt crisis, group warns

122 billion euros of Italian debt to be refinanced in 2013

Rome, August 26 - More than 122 billion euros of Italian public debt must be refinanced by the end of the year, according to a study released Monday by the business association Unimpresa. Unimpresa pointed out that the timing of the massive refinancing required means that if Italy's teetering right-left government falls before the end of the year, market jitters over whether the country has the political wherewithal to avoid default might trigger major repercussions on Italy's bond interest rates and spread with the German bund benchmark. The spread is a key measure of Italy's borrowing costs and of investor confidence in the country's ability to pay off its enormous sovereign debt. Senior figures of Silvio Berlusconi's People of Freedom Party (PdL) - the junior partner in the current government led by the Democratic Party's (PD) Enrico Letta - have threatened to pull the plug on the governing majority under two conditions. The PdL has staked its political future on the repeal of the IMU property tax, a major campaign promise that helped fuel the right's political comeback to second place in February's elections. PdL leaders have also threatened to withdraw their support for the current government if their PD counterparts in the Senate banish Berlusconi from the Upper House in a September vote - a measure triggered by the three-time premier's definitive conviction for tax fraud this month. So far, PD leaders have vowed to boot the media tycoon and give him a six-year ban on holding public office even if it means going to new elections. ''To parliament and the government, and hence to all parties, we ask a sense of responsibility. Political stability is decisive for financial markets and an eventual crisis of the majority risks wasting the positive results so far achieved precisely on the cost of (debt) emissions. Hopes of economic recovery would be truly compromised,'' said Unimpresa President Paolo Longobardi. Italian zero-coupon bonds worth 74.5 billion euros, Italian treasury bonds worth 37.8 billion euros, and 10.6 billion euros worth of zero-coupon treasury certificates are all due to be paid out and covered anew with fresh treasury debt by the end of 2013, Unimpresa reported.

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