Italian Sovereign

Italy has announced the details of a new BTP Italia sale, which will take place from Monday May 18, and be aimed at financing measures in response to the Covid-19 pandemic.

Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, May 4. The source for secondary trading levels is ICE Data Services.

The European Central Bank’s press conference on Thursday did not provide the headline fireworks that its last meeting did. The sombre tone caused “disappointment” among investors and a slight widening of peripheral spreads. SSA issuers were also left dissatisfied with the bank’s lack of support for the money markets.

The European Commission’s plans for a recovery fund will not be enough to prevent Italy’s public finances suffering a severe fiscal deterioration said Fitch, after the ratings agency downgraded the sovereign on Tuesday night.

Italy was able to raise almost €6bn in auctions with ease on Wednesday following Tuesday night’s unexpected downgrade by Fitch, which leaves it just one notch above junk.

Fitch Ratings has lowered Italy’s credit rating one notch to BBB- on Tuesday night, making the move more than two months ahead of its scheduled review in July.

From Italian government bonds to fallen angels, nothing is junk unless the European Central Bank says so.

Italy’s credit rating is dividing analysts. Some believe that it should have been downgraded by S&P on April 24 because of the country's ballooning debt burden, while others felt that the European Central Bank can keep the refinancing risk at bay.

Any concerns over whether the eurozone periphery would have market access after Bund spreads yawned wider during the past week were put to bed by a combined €31bn of borrowing from Italy and Spain. The sovereigns paid what was needed to put impressive dents in their ballooning funding requirements, ahead of a hotly anticipated European Council meeting on Thursday. Lewis McLellan and Tyler Davies report.

Rating: Baa3/BBB/BBB

Any concerns over Italy’s market access were vanquished on Tuesday when the sovereign received €110bn of orders for a dual tranche bond syndication, allowing it to raise €16bn as it makes inroads into its enlarged funding task in response to the coronavirus pandemic.

Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Tuesday, April 21. The source for secondary trading levels is ICE Data Services.