Italian Sovereign
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Issuance slowed in the sovereign, supranational and agency bond market this week thanks to Chinese New Year and the anticipation of US Federal Reserve chairperson, Janet Yellen's testimony to US Congress.
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Portugal’s 10 year yields have risen while fellow eurozone periphery sovereigns Italy and Spain have staged a moderate rally, with bankers noting that investor fears are focused on Portugal’s political outlook. -
Italy set bankers’ hearts aflutter this week with an early contender for deal of the year, breaking several records with a €9bn 30 year benchmark. But more importantly, the trade blasted open a hole at the long end that other sovereigns could pile through.
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Kommunalbanken (KBN) are set to price the first five year dollar bond for three weeks on Wednesday while Italy’s 30 year bond was the first SSA issuance in the tenor for 2016.
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Italy has sold the largest ever 30 year bond in euros, a trade that is likely to inspire other issuers into the tenor amid what some bankers are calling a key time for the SSA market.
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Italy is set to benefit from a Bank of Japan-induced rally in eurozone government bonds late last week after mandating for a 30 year benchmark on Monday — and bankers suggest Spain could follow with a similar deal.
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Monte dei Paschi di Siena may be the ugly sister of Italian banks for investors, but it’s the Italian sovereign’s favourite son when it comes to primary dealerships.
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As Monte dei Paschi di Siena’s shares gyrated last week, losing up to 34% of their value, the bank received a high honour, for a second year running — top primary dealer for Italian sovereign bonds.
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Portugal is limbering up for its first benchmark of the year in a week heavy with eurozone periphery sovereign issuance, including an auction where Italy’s three year yield nearly dipped below zero.
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Spain has mandated for its first deal of the year, but the sovereign has taken the rare step of bringing a syndication in the same week as it is holding auctions.
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Commerzbank this week became the latest bank to lose its place on a sovereign’s list of primary dealerships, raising a familiar, weary groan from SSA bankers worried about the future of the model — but the head of a major eurozone sovereign has said that issuers are on the banks’ side.
