Italy

The spectacle of Italian prime minister Matteo Renzi’s political suicide did little to rattle financial markets on Monday morning, with any immediate negativity in credit and equity that had not already been priced in ahead of the country’s Sunday referendum quickly eased over by shorters monetising their gains.

The 'no' vote in Italy’s referendum on constitutional reform was met on Monday morning with a muted reaction in credit and equity markets but, with profound uncertainty overhanging the political situation and Banca Monte dei Paschi di Siena’s rescue plan, analysts are not optimistic about the performance of the Italian financial sector in the short term.

The public sector bond market rode out the widely expected ‘no’ result of the Italian constitutional referendum on Sunday night, as bankers looked at a possible silver lining in the form of a more dovish European Central Bank meeting on Thursday.

Corporate bond investors are not taking Sunday’s Italian constitutional referendum lightly, but their minds are much more heavily focused on the European Central Bank’s meeting four days later.

A No vote in Italy’s referendum on constitutional reform will rock already struggling Italian bank debt spreads, but FIG market participants are prepared to weather any volatility as they wait for the opportunity to lock up investors’ remaining cash this year.

Market participants are nervously awaiting the results of Banca Monte dei Paschi di Siena’s debt-for-equity swap, which could derail the Italian lender’s ambitious rescue plan — notwithstanding any potential volatility following the country’s referendum on Sunday.

Pressure mounted on Italian sovereign bonds and credit default swaps this week, as rumours of increased European Central Bank support were quickly dampened and traders positioned for a 'No' vote in this weekend’s referendum.

Italy’s Mediobanca is adapting its approach and preparing for European expansion, following a hiring spree in its corporate finance division, writes David Rothnie.

Rumours of increased European Central Bank support have failed to take pressure off Italian sovereign credit default swaps, despite a rally on Tuesday, with the country resuming its widening divergence from European peers on Wednesday ahead of this weekend’s referendum.

The Italian referendum on December 4 has been lurking in SSA bankers' diaries as a dangerous risk event but, on Tuesday, rumours of enhanced European Central Bank support led to a rally in Italian government paper.

Italy’s bond yields hit their highest levels at auction since June 2015 at the country’s final bond sale before Sunday's constitutional reform referendum that could lead to the resignation of prime minister Matteo Renzi.

German building materials manufacturer HeidelbergCement capped a month of good rating agency news with a blowout order book as it tapped the euro bond market for €1bn on Monday.