Italy

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.

Equities have made a stirring recovery since the record coronavirus sell-off in March. Corporates, looking to raise cash by any means necessary to survive the crisis and lower their risk, have taken advantage of the uplift, selling non-core equity holdings. Now, more are being urged to get in on the trade while it lasts, as there are fears that stock markets will plummet again if lockdowns or infections worsen with the pandemic far from over, writes Sam Kerr.

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

Telecom Italia and Vodafone have monetised part of their stakes in Inwit, the Italian wireless telecommunications infrastructure company, reopening the market for secondary share sales in Europe.

Analysts have praised UniCredit for taking a conservative approach to dealing with the coronavirus pandemic, after the Italian bank said on Wednesday that it would be making higher loan losses provisions in the first quarter than had been expected by the market.

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.