MILAN, April 14 — Orders for a new inflation-linked bond Italy started offering to small investors today topped €5 billion (RM22 billion) five hours into the sale, confirming the allure of a security that has raised record amounts in the past.

This is the sixth offering of the bond dubbed BTP Italia, which the Treasury first launched in March 2012 targeting wealthy Italian households as foreign investors shunned its debt due to the euro zone crisis.

Generous protection against Italian inflation and some innovative features have ensured these bonds were very successful with investors, including professional ones.

The last issue in November last year netted €22 billion in just a day an a half, the largest single bond sale by a European government.

This week’s offer comes as investors are eager to snap up debt from Italy and other weaker euro zone countries amid signs of economic recovery.

Last week Greece sold its first sovereign bond since an international bailout in 2010, and just two years after imposing heavy losses on its private creditors.

Italian bond yields have fallen to multi-year lows in recent weeks as investors pocketed the extra return they offer on the backdrop of low interest rates.

Analysts expect Italy to raise up to €15 billion from the new BTP Italia bond, which for the first time has a six-year instead of a four-year maturity and will pay a real coupon of at least 1.65 per cent.

The bond comes at a time of slowing inflation in the euro zone. The Italian inflation index to which the bond is tied rose just 0.3 per cent year-on-year in March.

However ING analyst Alessandro Giansanti said that an inflation rate of 0.5 per cent would be enough for the bond to outperform a same-maturity nominal bond.

Analysts at Barclays said Italian inflation was likely to have hit a bottom and would probably rise gradually in the coming quarters.

The Treasury fills in full demand for these bonds and has struggled to find a way to control the final issue size.

For the first time the Treasury is now offering the bond exclusively to small investors during the first three days of the sale. It may decide to close it early after the second day.

On Thursday, the same bond will be offered to institutional investors throughout the day. The Treasury can decide to halt the offer at any time giving a 30 minute notice. — Reuters