Italy’s strategy to increase small domestic savers’ holdings of its massive public debt is becoming more difficult, analysts warn. However, foreign investors drawn to Rome’s political stability and improving finances could help fill the gap.
🔹 Retail Investors’ Growing Role
Since the eurozone debt crisis in 2012, Italy has focused on retail investors, believing they are less likely to withdraw funds in times of market stress. This approach has successfully raised €245 billion ($257.52 billion) through retail bond issuances.
As of November 2024, small savers held nearly 15% of Italy’s €3 trillion debt, up from 13.5% a year earlier, according to the Bank of Italy. However, foreign investors still hold 31% of the debt.
🔹 Declining Appetite for Bonds
In February 2025, Italy raised €14.9 billion from its new 8-year “BTP Plus” retail bond, but analysts warn that demand could weaken. Rising inflation in 2022-23 has eroded household savings, while falling European Central Bank interest rates make government bonds less attractive.
🔹 Lower Retail Issuance Expected
Commerzbank strategist Hauke Siemssen predicts that Italy will struggle to match the nearly €30 billion in retail bonds issued in 2024, which was already down from €44 billion in 2023.
UniCredit analysts estimate that Italian households will contribute around €50 billion to public financing in 2025, far below €130 billion in 2023. While retail demand slows, foreign investors may step in to fill the gap.