* Italy bond selloff not just about politics – Italy debt official
* Contagion from Italy limited – Portugal debt chief
* ECB tapering no problem – issuers (Updates throughout)
By Abhinav Ramnarayan and Dhara Ranasinghe
LONDON, June 19 (Reuters) – Recent sharp volatility in short-dated Italian government bonds was partly due to technical factors in addition to political concerns, a senior official at the Italian government debt agency said on Tuesday.
Italian bond markets in May experienced some of their biggest swings in several years as an anti-establishment coalition took shape in Rome.
But some technical factors such as the reduced capacity of primary dealers to trade government bonds also contributed to market volatility, Davide Iacovoni, director general, Public Debt Directorate at Italy’s Department of Treasury said at a conference in London.
“We have the feeling that the magnitude of the swings is not only attributable to political events but to technical changes in the market as well,” he said a Euromoney conference.
He said that regulations in the financial industry have reduced the capacity of primary dealers — banks appointed by governments to sell and trade government bonds — to act as a buffer for volatility as they have done in the past.
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