Alert threshold for Italian-German risk premium is 340 bps, Treasury official says

An alert threshold for the risk premium of Italian government debt over German would be 340 or 350 basis points (bps), far above the current level of almost 200, a junior minister at Italy's Treasury said on Friday. Italy is under growing scrutiny from investors after the government this week cut its growth forecasts for this year and next and hiked its budget deficit targets.

The so-called "spread" between Italian and German 10-year bond yields – a gauge of market sentiment towards the euro area's most indebted countries – is at around 193 bps, its highest since early May. But economy undersecretary Federico Freni said that a spread of around 200 bps was "not a worrying rate at all".

"I believe that an alert threshold could be the peak reached in the last three or four years, meaning 340 and 350 basis points," he told Radio 24 broadcaster. Italy's public debt, proportionally the highest in the euro zone after Greece, is targeted to remain stable at around 140% of GDP through 2026 under the Treasury's Economic and Financial Document (DEF).