Italy’s leaders are winning the battle Syriza lost

J Paul Getty once said that if you owe the bank $100, that’s your problem. But if you owe the bank $100m, that’s the bank’s problem. Italy’s battle with Europe and the response from the European Central Bank (ECB) suggest the same is true of eurozone membership.

  • By Craig McGlashan
  • 08 Nov 2018
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A populist government with a vow to consign austerity to history is sparring with the European Commission and causing headaches for investors. Sound familiar?

The same was true in early 2015, when Syriza took charge of Greece on an anti-austerity platform. Later that year, the Greek people voted against accepting bailout conditions from the ‘Troika’ of the Commission, the International Monetary Fund and ECB.

But Syriza soon changed its tune, agreeing to meet the Troika’s demands after the latter applied considerable pressure. Former Syriza members are speaking out against the shift from the party, which is still in government.

Should we expect a similar outcome from the situation in Italy today?

It doesn’t look likely so far. The ECB has yet to say how it will weight its reinvestments after quantitative easing ends this year. Speculation is rife that it might switch its approach to offer greater support to the eurozone periphery countries, such as Italy.

There is also growing confidence among market participants that the ECB will provide banks with cheap financing via a fresh round of Targeted Longer-Term Refinancing Operations to wean lenders off the old programme. Such a move would again benefit Italy and the periphery.

Were he around today, Getty might say that if, like Greece, you make up 1.6% of the eurozone’s economy and want to ignore the ECB, that’s your problem. But if you make up 15%, like Italy does, that’s the ECB’s problem.

  • By Craig McGlashan
  • 08 Nov 2018

European Sovereign Bonds

Rank Lead Manager Amount €m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 16,032.07 25 9.75%
2 Barclays 15,041.98 19 9.15%
3 Citi 13,795.56 24 8.39%
4 HSBC 12,009.31 18 7.30%
5 BNP Paribas 10,802.75 16 6.57%

Dollar Denominated SSA (Excl US Agency)

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 41,726.66 111 12.22%
2 JPMorgan 29,288.84 79 8.57%
3 HSBC 29,000.04 74 8.49%
4 Bank of America Merrill Lynch 27,450.34 80 8.04%
5 Goldman Sachs 24,685.10 55 7.23%

Bookrunners of Euro Denominated SSA (Excl US Agency)

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 35,645.82 96 8.02%
2 HSBC 32,437.47 116 7.30%
3 Barclays 31,737.51 60 7.14%
4 UniCredit 30,989.16 83 6.97%
5 BNP Paribas 27,189.65 67 6.11%

Bookrunners of Global SSA (Excl US Agency)

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 77,915.32 278 6.83%
2 JPMorgan 77,428.97 443 6.78%
3 HSBC 73,010.93 287 6.40%
4 Barclays 59,775.59 229 5.24%
5 Deutsche Bank 52,560.34 166 4.60%