ROME: Italy’s state lender Cassa Depositi e Prestiti (CDP) said it would offer its first retail bond to help fund public works projects.
CDP will offer 1 billion euros ($1.08 billion) worth of bonds to Italian residents from March 9 to March 27, it said in a statement.
While CDP has offered postal bonds since the 1920s, this is the first time it has sold retail bonds through banks, a spokeswoman said.
Italy’s government has successfully issued a series of retail bonds in recent years beginning with a first issuance tied to domestic inflation in March 2012 to tap large domestic savings when there was scant appetite for its debt abroad.
A record 22 billion euro issue in 2013 was the largest single bond sale by a European government.
The CDP spokeswoman said buyers would pay 12.5 percent tax on the bond’s income instead of the 26 percent paid on corporate bonds because the money is being raised for projects that are in the public interest.
The bonds, which will have a maturity of seven years, will not be guaranteed by the state and the issue amount could increase to as much as 1.5 billion euros, CDP said.
The proceeds of the offer will be used by CDP to finance public interest investments … such as, for example, direct financing to public entities, support for the economy and public interest infrastructure,” it said.
The bonds will carry a fixed interest rate for the first two years and then a floating rate, CDP said.
CDP debt is rated BBB+ by Fitch, Baa2 by Moody’s and BBB- by Standard & Poor’s. Fitch has assigned to the bonds an expected rating equal to BBB+, CDP said.
