Italian Sovereign

Italy could be in for pain at auction this week as the sovereign’s curve has yet to fully recover from a spike in yields caused by a sharp sell-off in peripheral sovereign debt two weeks ago. It printed two year paper on Tuesday at a yield almost double that of a month ago.

Italy's Banca Carige is set to raise around €650m through a capital raise that will form part of its response to the weekend's Asset Quality Review and stress test results, alongside asset disposals and other moves.

Rhiag, the Italian car parts distributor, has priced a €50m tap of its €215m 2020 bond at par.

In this round-up, RMB deposits in Taiwan break past Rmb300bn in September, Macau RMB deposits and RMB cross border trade fell slightly in August, the Hong Kong-Shanghai Stock Connect initiative looks likely to be launching later than expected, and a Canada-China currency swap line could be coming in November.

Italy has sold its smallest BTP Italia since the dark days of the eurozone debt crisis, partly because of a sharp fall in retail demand. The lack of domestic interest — despite the coupon on offer increasing during the book build process — could be a warning sign for the sovereign, said analysts, although others argued there were more technical aspects at play.

Asset managers Tikehau IM and Emisys have provided a six year €14.2m unitranche bond facility for the acquisition by a group of investors led by LBO Italia of GF SpA, a manufacturer of automated filling machines for the pharmaceutical industry. It is the first time such a debt structure has been used for this type of deal in Italy, people involved said.

On an extraordinary day in the capital markets, a very ordinary corporate bond was issued on Wednesday — a €500m 8.5 year issue for Snam, the Italian gas transport group, that was nicely oversubscribed and closed trading at reoffer.

Exor, a principal holding company of the Agnelli family, which founded Fiat, on Wednesday issued its first bond since 2007. Despite shaky market conditions, the 10 year bond attracted ample demand, helped by the fact that it offered about 150bp of spread — not available every day on investment grade paper.

Bankers are often cagey when it comes to talking about sensitive commercial data, but Italians are always game to talk politics - and have a knack for the clear if unconventional analogy. This was proven once again when Loan Ranger was getting the latest on the Italian market.

Spain’s spread over Germany widened on Monday ahead of Bonos auctions later in the week, a move that analysts attributed to attempts by the president of Catalonia to launch an independence referendum. Meanwhile, Italy suffered a slight rise at a 10 year bond auction on Monday, but managed to post a euro-era record in the five year part of the curve.

Italy suffered a slight rise in its two year yields at auction on Thursday, as analysts reduced growth expectations for the country. The sovereign has a longer dated auction next week and has also taken another step to limit institutional participation in its retail focused BTP Italia bonds, which will next be sold in October, introducing an allotment element for the first time.

CNH Industrial, the US-Italian maker of agricultural and construction machinery and trucks rated Ba2/BB+, prioritised price over size for its euro bond return on Monday.