Periphery in demand as OBCs arrive

Demand was still clearly skewed to the higher yielding peripheral markets on Friday, especially for second tier Italian banks, which offer double the spread of multi-Cédulas. And if peripheral spreads continue to tighten, the newly enacted Italian Obbligazioni Bancarie Collateralizzate, or Italian SME backed covered bonds, might eventually attract interest. But only when secondary legislation has been formulated and come into force which will take time.