Italy

Italian lender Credito Emiliano opened books on a new €200m tier two on Wednesday, as it looked to improve its financial position in a strong market for subordinated debt.

All eyes were on Italy in the primary euro public sector bond market on Tuesday as it pipped Spain for the biggest ever order book for a eurozone sovereign syndicated bond in the 20 year part of the curve.

Italy is returning to the international debt market for another syndication, its first since June.

Banco BPM opened books for a new tier two on Monday, as it looked to take advantage of supply and demand dynamics in a quieter September than usual.

Senior deals from Banco de Sabadell and Mediobanca underlined the pricing benefits of printing in green formats this week, with both coming inside conventional curves. Other issuers could be tempted to follow.

A new tier two deal from Italian lender Monte dei Paschi di Siena on Thursday showed that the market is open for trickier credits looking to sell riskier bonds. The deal emerged as the European Central Bank told Monte to raise capital to complete the sale of €8bn of non-performing exposures to Amco, the state-owned asset management company.

Mediobanca was able to attract demand seven times the size of its new €500m senior bond on Tuesday, which was its debut green deal. The high demand allowed the issuer to launch with a negative new issue premium based on its conventional curve.

Supply and demand for senior financial institution bonds was lukewarm this week, as issuers and investors favoured higher yielding products amid healthy market conditions. FIG deal arrangers are predicting that the trend is set to continue and that issuers will favour capital trades.

Mediobanca has been speaking with a 'high' number of investors in the euro market this week, as it gears up to sell the first ever deal from its green and sustainable bond programme.

Intesa Sanpaolo racked up plenty of orders behind an additional tier one (AT1) on Tuesday, showing that investors are hungry for new sources of yield. The deal ended a long pause for sales of subordinated debt in the euro market.

National champions have outpaced their smaller peers in the rally in bank bond spreads over recent months. Investors say individual valuations in the middle tier of the sector could pick up, but that the chances of consolidation may first have to improve.

The three major rating agencies have upgraded UBI’s credit rating, to be in line with Intesa Sanpaolo’s as the latter's takeover of the former concludes. Market participants are expecting UBI’s covered bond spreads to tighten as a result.