Italian Sovereign
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An impressive rally in Italian risk assets has been completely overturned this week, as Italy descended into political chaos. Some market participants now fear a repeat of last year, when Italian issuers were frozen out of debt and equity markets as the country’s government fought with the European Commission over its annual budget targets. Tyler Davies and Sam Kerr report. -
Disruption in Italian politics has punished the BTP market this week as the country heads towards a possible autumn general election.
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Rising expectations of a snap Italian election before the end of the year are threatening to send the spread between 10 year Bunds and BTPs wider by as much as 250bp, according to analysts.
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Borrowers across the eurozone periphery will have spied a chance to raise capital after deals from Greece and Italy’s Banco di Desio this week.
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Italy has hired banks to tap its 2.8% March 2067 BTPs, as the week's supply of long term euro debt shows little sign of abating.
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Giovanni Tria, Italy’s minister of economy and finance, rebuffed the chances of a controversial ‘Mini BOT’ financial instrument coming into effect, as he gave a keynote address at the start of Euromoney's Global Borrowers and Bond Investors Forum in London on Tuesday.
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Investors piled into deals for Spain and Italy on Wednesday despite the miniscule yields on offer, as the spectre of further easing of monetary policy looms large over the market.
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Italy has surprised the market by hitting screens with a new 20 year euro benchmark trade while it is facing disciplinary action from the European Union for having excessive debt.
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Italy’s parliament stunned the capital markets this week when it waved through a radical motion to explore issuing securities that resemble a parallel currency to the euro, in a development that has been met with almost universal derision. Frank Jackman, Lewis McLellan and Mike Turner report.
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Financial institution issuers surprised market participants with no deals in the euro market on Monday after a busy period of roadshows. And as the week moves towards the European Central Bank's announcements on Thursday, issuance conditions might not improve.
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The public sector bond market is braced for S&P’s review of Italy’s credit rating this Friday. Investor analysts said a downgrade would result in a “material widening” of BTPs if the sovereign fell to just one notch above investment grade.
