Italian Sovereign

A triple-A rated supranational and two sovereigns from the eurozone periphery took the opportunity to lock in low rates at the long end this week, amid strong market conditions. SSA bankers expect more supply to follow at this part of the curve over the coming weeks, including from France and potentially Greece.

Italy and Belgium were the latest eurozone sovereigns to build their largest ever order books for syndicated bonds on Wednesday, with the former coming close to breaking the record demand from a eurozone issuer set by Spain on Tuesday.

Spain and Cyprus attracted strong demand for their syndicated bonds on Tuesday, with the former receiving the largest ever order book for a public sector euro benchmark. Italy and Belgium will add to the eurozone sovereign supply on Wednesday after mandating leads for new 30 and 10 year trades, respectively.

Italy is planning to issue its inaugural green bond in the second half of 2020, joining Germany and Sweden, who are also looking to sell their debut bonds in the format next year.

Italy printed an €800m 20 year inflation linked private placement on Thursday, satisfying demand from a single investor.

Luxembourg is issuing a euro benchmark bond on Wednesday, for the first time for almost three years, setting out to raise €1.7bn with a zero coupon seven year bond. Other issuers are waiting to pounce if the European Central Bank's quantitative easing resumption creates the right conditions.

Italy won huge backing from investors as it placed its first BTP Italia trade since a poorly received deal in November 2018, which came during the peak of the volatility in the country’s bond market.

The Italian cabinet’s late night agreement on a draft budget for 2020 will drive investors to hold longer maturity BTPs, causing spreads to tighten ahead of a potential rating outlook upgrade next week, said analysts.

Rating: Baa3/BBB/BBB

After making a strong return to the dollar bond market for the first time since 2010, Italy aims to become a frequent issuer in the currency once again, according to the sovereign’s funding head.

Italy delighted investors with its first dollar bond in almost a decade on Wednesday, as it raised $7bn across three tranches. However, bankers away from the deal said the sovereign paid up over its domestic cost of funding — something it had originally planned to avoid.

Italy is out with initial price thoughts for its first dollar bond since 2010 as it aims to rebuild its curve in the currency. The sovereign is taking indications of interest for five, 10 and 30 year maturities, ahead of an expected launch on Wednesday.