Italy risks billions in losses over derivatives

Italy faces potential losses worth billions of euros on derivatives contracts it restructured at the height of the euro-zone crisis, the Financial Times reported , citing a confidential report by the Rome Treasury
The 29-page Treasury report details Italy's debt transactions and exposure in the first half of 2012, including the restructuring of eight derivatives contracts with foreign banks with a total notional value of 31.7 billion euros ($41 billion), the FT said
The FT cited experts as saying the restructuring allowed Italy to stagger payments owed to foreign banks over a longer period, sometimes at more disadvantageous terms for Italy
An European Central Bank spokesman declined to comment on the bank's knowledge of Italy's potential exposure to derivatives losses, the FT said
The Treasury report didn't quantify potential losses on the contracts but three independent experts consulted by the FT calculated the losses based on market prices on June 20, and concluded the Treasury was facing a potential loss at that moment of about EUR8 billion, a surprisingly high figure based on a notional value of EUR31.7 billion, the FT said