Politics

Trump has reportedly offered US funds to buy Italian debt

Key Points
  • Italian media claim the President Trump has offered to buy Italian government bonds in 2019.
  • Borrowing costs for Italy have risen as investors have dumped the country's debt.
  • The end of the ECB's asset purchase program and political instability are cited as reasons for selling Italian bonds.
Italy's Prime Minister Giuseppe Conte (L) shakes hands with the President of the United States Donald Trump on the first day of the G7 Summit.
 Leon Neal | Getty Images

President Donald Trump reportedly offered to buy Italian sovereign bonds during a White House meeting last month with Prime Minister Giuseppe Conte.

According to Italian newspaper Corriere della Sera, Trump offered to help finance Italy's 2019 public borrowing, when the Rome treasury is scheduled to issue about 400 billion euros ($462 billion) worth of debt.

Italy recorded a government debt equivalent to more than 130 percent of the country's gross domestic product (GDP) in 2017, but has been able to keep repayments down thanks to the interest lowering effect of the European Central Bank's asset purchase program.

But that program is set to end in December and political instability in Italy, along with the country's wavering commitment to the European Union, have seen Italian borrowing costs spike to levels not seen since 2014.

The news report added that while Rome is increasingly desperate to replace the private investors who are fleeing Italian bonds, it is unclear how the U.S. could step in to guarantee the debt.

And on the question of why the U.S. administration would act as an anchor buyer of Italian bonds, the paper quoted Christopher Wood, analyst of the financial letter "Greed and Fear," who suggested Trump may be keen to sow division within the EU.

"Trump could not have made it more clear that he supports the cause of those in Italy who want to leave the euro," Wood said.

For more on Trump's reported offer to buy Italian public debt, click here.

At the time of publication, White House press staff had not responded to a CNBC request for comment.