Italy’s judiciary has opened an inquiry into the Treasury’s use of derivatives to hedge public debt after reports that the state faced potential losses of billions of euros on contracts restructured during the eurozone debt crisis last year.
Nello Rossi, Rome’s deputy prosecutor, told the Financial Times that he would meet the Treasury, the Bank of Italy and state auditors but stressed it was not a criminal investigation. The inquiry was prompted after a Treasury report was leaked to the FT and Italian daily La Repubblica detailing the restructuring of eight derivatives contracts in 2012.
Experts who examined the data concluded that Italy risked a potential loss on the contracts, based on market prices last week, of about €8bn on a total notional value of €31.7bn. Last year Italy said it had a derivatives portfolio of €160bn, about 10 per cent of state bonds in circulation.