Italian Sovereign

A eurozone periphery sovereign drew a hefty book for an inflation linked benchmark on Wednesday, paving the way for other countries from the region to bring deals, according to SSA bankers.

The European Central Bank has beaten a case against it by a group of Italian investors claiming damages over the 2012 restructuring of Greek debt.

The SSA pipeline is in full flow mid-week with a series of strongly supported deals, despite Ontario on Monday pulling a euro benchmark — the first pulled public sector deal in nearly a year.

Italy’s five and 10 year borrowing costs dropped to their lowest levels since April on Tuesday, as the sovereign hit its maximum volume target of €8bn at a bond auction.

Spain is enjoying a strong warm-up for a debt auction this week, as its yields fell faster than its eurozone periphery peers following a Catalonian election where independence parties won just under 50% of the vote.

The second Greek general election of the year has returned a much more market friendly result than the first one, and SSA bankers are hopeful that a prevailing calm in the euro market could lead to some deals.

Greece heads to the polls over the weekend for its second parliamentary election this year, but there is little concern of the plebiscite rocking markets like the earlier vote in January.

Spain’s borrowing costs dropped in five years but rose in threes and 10s at an auction on Thursday, as Italy shelved its BTP Italia product for the year.

Italy shunted just over €2bn of redemptions due over the next three years into the next decade, as Portugal sliced several basis points from its short term borrowing costs.

Spain kicked off a busy week for the eurozone periphery with a bill sale where the sovereign’s borrowing costs repeated their pattern for much of this year by bumping around 0%.

Italy’s borrowing costs dropped across the curve at an auction on Friday, although its yields at the longer end are still some distance from the euro-era lows hit earlier this year.

Ireland has cut its 15 year borrowing costs at its biggest auction of the tenor this year, as Italy prepares to tempt investors even further out the maturity curve.