Markets falling out of love with Italian debt as Meloni's problems mount
By Sara Rossi
Published on April 13, 2026.
Italian Prime Minister Giorgia Meloni's vulnerability to the Middle East war has led to a decrease in confidence in the country's bonds. Italy's two-year borrowing costs rose 75 basis points in March, marking the biggest monthly rise since 2022. Despite a two-week ceasefire announcement in early April, Italian yields remain above levels traded before the US and Israel attacked Iran. Despite this, Italian debt financing costs rose at auction to the highest level since July 2024. This makes it more costly for Rome to finance its public debt, which rose last year to 137% of gross domestic product and is the second largest in the euro zone after Greece's. The risk of prolonged energy price increases has raised concerns about Italy's growth outlook.
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