Europe

Capital markets in Italy were plunged into an inferno of uncertainty this week, as investors appeared to lose confidence in the country’s economy and banks following the government’s release of its proposed budget, write Sam Kerr and Jasper Cox. Banks and companies looking to raise equity or debt face a tricky time.

Volksbank Wien abandoned its plans to sell its first additional tier one transaction this week after being met with limited demand in the euro market.

Italian government bonds suffered another up and down week as investors first baulked at government plans for the budget deficit to be 2.4% of GDP in each of the next three years — then snapped up paper amid suggestions that the deficit would fall gradually. In any case, many on the buy-side are wary of any policy announcements that come from the government.

Guarantor: Swedish local government members

Two Nordic agencies have raised their funding needs for the year due to an increase in their lending activity, just as the final quarter has begun.

Rating: B1/B+

HSBC said on Thursday that it had strengthened its infrastructure and real estate team, hiring six bankers externally and making five internal appointments.

Public sector bond market participants are growing increasingly frustrated at the pace of the implementation of Ester, the alternative euro risk-free rate to replace Euribor. Borrowers are unable to plan for, let alone issue, a bond linked to the benchmark without the rate being published by the European Central Bank. That leaves the euro far behind other markets where Libor is being replaced, writes Burhan Khadbai.

Italy bowed to pressure — some from the markets, but some from eurozone politicians — and revised down its budget deficit target this week. But the European Union should not go too hard on the country for the long-term health of the union.

LeasePlan, the Dutch car leasing company, has launched its IPO on the Amsterdam and Brussels bourses, having filed an intention to float document on Thursday.

The Spanish covered bond market faces a day of reckoning now that the European Central Bank will be buying a lot less of it leading Barclays analysts to recommend investors look elsewhere. However, others say Cédulas supply is likely to remain limited through the course of next year, and given the market’s "terrible liquidity", executing any trade ideas in the secondary is likely to prove a non-starter.

The IPO of Tuscany cigar manufacturer Sigaro Toscano was postponed this week following a spate of volatility in Italian markets following the announcement of the government's proposed budget. However, the Milan listing of Piovan, which makes equipment for plastics processing, is still set to go ahead after a pricing range on the deal was set on Thursday.