Italy

Italy took two steps forward in fixing its embattled banking system on Thursday, as UniCredit won shareholder approval for its €13bn rights issue, while UBI Banca shares surged on the news that it will seek to raise €400m to support a takeover of three retail banks bailed out in 2015.

The week's heavy pace of investment grade corporate bond supply extended into Thursday, as lower rated issuers dominated deal flow and crossover names thrived.

UniCredit said on Thursday that complications around the bank’s planned €13bn capital increase could jeopardise its ability to pay additional tier one (AT1) coupons.

Intesa SanPaolo was looking to sell a seven year bond on Wednesday, following a spate of successful shorter dated vanilla senior issues.

Arle Capital Partners has sold its remaining stake in Technogym, the Italian fitness equipment maker founded by Nerio Alessandri, for €100m, through an accelerated bookbuild that was covered in half an hour.

Spanish telecoms provider Telefónica hit the euro market on Tuesday for a dual tranche offering that tested the outer limit of investors’ appetite for long tenors.

Following a non-deal roadshow in December, Italian electricity and gas distributor Enel sold investors a €1.25bn seven year deal on Monday as it made its debut in the green bond market.

Société Générale has hired a senior banker from Bank of America Merrill Lynch to become its head of global banking, investor solutions, coverage and investment banking in Italy.

If Banca Monte dei Paschi di Siena (MPS) is able to wrangle a recapitalisation that looks more like a bail-out than a bail-in, it will set a precedent for Europe's other weakest banks.

As plans for the bailout of Banca Monte dei Paschi take shape, attention is turning to how its shares could trade once the recapitalisation has taken place. The financial details are not clear yet, but it is likely to involve the creation of €5bn or more of new equity, held by the government and former owners of subordinated bonds.

The state bail-out of Banca Monte dei Paschi di Siena, announced during the night, has brought relief to the Italian financial system — at last, there is a plan for dealing with Italy’s weakest large bank. But there are already questions about whether it undermines Europe’s policy on dealing with bank failures.

A private sector recapitalisation of the ailing Italian bank, Monte dei Paschi di Siena, is looking increasingly unlikely, following the limited take-up for the liability management exercise and low interest in the equity raising, meaning that state-led intervention will now be needed.