Intesa Sanpaolo

Market participants expect European banks to take a large chunk of funding through the European Central Bank’s Targeted Longer-Term Refinancing Operations (TLTRO III) programme, hitting covered bond supply levels. But issuance in other asset classes should remain unaffected as banks follow through with their funding plans.

BPER Banca opened books for its inaugural sale of senior debt on Wednesday, giving investors their first chance to buy into a new issue from a second tier Italian bank during the Covid-19 pandemic.

Intesa Sanpaolo was able to pick up competitive terms on a new tier two this week, after bringing a deal in the sterling market that had already been wall-crossed and underwritten by Morgan Stanley.

Ferrovie dello Stato Italiane, the Italian state railway holding company, has signed a €600m loan package that includes an environmental element. Europe’s loan borrowers are following the bond market away from pandemic crisis funding and back towards sustainability-conscious financing.

The European Central Bank said this week that Covid-19 could hamper some banks from meeting their targets for the minimum requirements for own funds and eligible liabilities (MREL), given the likelihood of credit rating downgrades and dislocation in the funding markets.

A series of comeback trades has established firm demand for every debt class in the bank bond market. With credit spreads moving another leg tighter this week, issuers must now consider whether they have a precious opportunity to wheel out their riskiest transactions with the coronavirus pandemic still threatening society and capital markets. Tyler Davies reports.

Bank balance sheets are set to expand and Intesa's will be no exception. It will mean an an increased reliance on central bank funding. But apart from this, the Italian bank's mix of funding is likely to remain unchanged from February with the emphasis on regulatory capital. But as Alessandro Lolli, head of group treasury and finance told GlobalCapital, the bank has great flexibility in navigating its capital raising during the pandemic.

Fitch cut the ratings of four Italian banks this week, triggering underperformance in the market and pushing some non-preferred senior bonds into speculative grade territory.

Italian-American car company Fiat Chrysler has drawn down on its €6.25bn revolving credit facility to shore up its finances during the Covid-19 pandemic, though the company has left a new bridge loan untouched.

Bank of Italy officials said this week that the country’s most fragile financial institutions might struggle to cope with the economic impact of the coronavirus pandemic, raising the prospect of consolidation within the banking sector.

Turkey’s Akbank has refinanced a syndicated loan with tighter margins than its existing facility, as lenders demonstrate unwavering appetite for Turkish debt.

Spain’s Red Eléctrica Corporación has hired banks to run a series of fixed income investor calls for a debut five year senior unsecured deal, in the first European corporate roadshow since stringent social distancing measures were implemented across the continent.