Europe’s Yield-Hungry Everyday Savers Are Snapping Up Government Bonds

Wedged between soap operas and the evening news on Italian TV, a commercial presented familiar domestic scenes: a couple making their morning coffee, children tucked up in bed, a dog bounding around a kitchen. The product wasn’t a cleaning spray or a household appliance but government bonds from an upcoming auction.

Italians didn’t need much persuading. With memories of zero and even negative interest rates still fresh, they flocked to participate in the sale, helping the government raise more than €18 billion ($19.9 billion), a record amount for an Italian debt offering pitched at retail investors. With an interest rate of 3.25% that rises in two years to 4%, the bonds don’t get close to offsetting Italy’s inflation rate of more than 6%, but for many consumers it beats what they are used to getting from banks. “Italian households are fascinated by the revolution from negative to positive interest rates,” says Massimo Famularo, a financial consultant in Milan who blogs about personal finance. “They are buying what is advertised on TV.”