It has been a cold, hard winter for Italian government debt. The country has been the euro zone’s worst performer; for the first time its bonds are yielding more than their Greek equivalents with maturities longer than three years.

Italy’s is the only European bond market whose yield spread has widened compared to the struggling German benchmark over the past three months. It was the best performer over the summer, so what is going wrong?

The simple answer — as ever — is the febrile state of Italian politics. There isn’t an actual crisis this time; it’s more the expectation that the uneasy government coalition between the populist Five Star Movement and the more mainstream Democratic Party may falter. With regional elections on Jan. 26, it will be a difficult month for the reluctant partners to navigate.

There are other headwinds explaining why investors aren’t too keen on taking advantage of the greater yield on offer with Italian sovereign bonds. For one, an awful lot of them are about to come up for sale. Two-thirds of Rome’s annual net issuance (after accounting for redemptions) is slated for January, with 36 billion euros ($40 billion) of new money to be raised.

The European Central Bank has restarted its Quantitative Easing bond-buying programs, and having the biggest buyer of all back in the market would normally make things easier for the Italians. Unfortunately, the ECB previously over-weighted Italian assets in its mass purchases, so it’s buying fewer of the country’s bonds to bring its holdings back into line with its fixed targets.

NatWest Markets analysts reckon this could mean 20 billion euros steered away from Italian sovereigns this year. Additionally, they note that Italian domestic banks have been net sellers of their country’s debt over the past 12 months after being aggressive purchasers in 2018.

Still, these factors are largely priced in now. As such, yield-starved bond investors will be looking for an opening, especially given that tempting spread over German bunds. While Italy is selling a lot, there will also be chunky redemptions — limiting the supply in the market. Over 2020, there will be about 250 billion euros of issuance, but only about 50 billion euros of that is new money.  And in reality, it will only be half that latter amount after factoring in the planned ECB QE purchases.

If you can look beyond the front-loading of supply in the first quarter, there’s reason for hope. As always, though, politics will drive the market too and Italian bonds aren’t for the faint-hearted. Foreign buyers will probably return with gusto if the political temperature subsides — Japanese investors in particular bought far more Italian debt last year than previously.

Politics aside, it’s the cheapest bond market in Europe and that will be hard for investors to overlook for too long.

To contact the author of this story: Marcus Ashworth at mashworth4@bloomberg.net

To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.

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