Italy
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By the second day of Saipem’s auction of its unsold rights, all of them had been sold to investors — but with the share price still 3.3% below the subscription price at Thursday's close, the underwriters may yet have to buy up to €427m of stock. -
Saipem's share price rose 13.7% on Monday morning, bringing some relief to bookrunners on the firm’s rights issue, which are facing up to€427m of exposure to its shares. By the end of the day, however, the stock was up just 1.4%.
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Saipem, the Italian oil and gas engineering group, announced late on Thursday evening an 87.8% take-up for its €3.5bn rights issue, leaving the underwriters potentially on the hook for up to €427m. In a concerning sign, the shares were suspended on Friday after falling 11%, though they have recovered to 6% down.
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European credit markets, led by the banking sector, have seen risk escalate over the past several weeks with the Markit iTraxx Europe Main index seeing its spread widen to the highs of June 2013. One bright spot however, has been the region’s sovereign credit, which has largely steered clear of the contagion that developed in the corporate market.
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A rise in eurozone periphery sovereign yields this week took its toll on Italy’s borrowing costs at an auction on Thursday, but Ireland showcased its semi-core status as its costs fell at a bond sale.
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Issuance slowed in the sovereign, supranational and agency bond market this week thanks to Chinese New Year and the anticipation of US Federal Reserve chairperson, Janet Yellen's testimony to US Congress.
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UniCredit released its fourth quarter results on Tuesday, but these did little to reassure stakeholders, who have already seen the bank’s share price fall this year to its lowest level since 2012. However, while the bank as a whole took a hit, its corporate and investment banking division (CIB) grew year on year.
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Europe’s banks, with a few notable exceptions, have yet to be hit hard with claims of unethical dealing. But that is likely to change. Thanks to a quirk of the European regulatory system, supervisors need to find some misselling before it is too late.
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Portugal’s 10 year yields have risen while fellow eurozone periphery sovereigns Italy and Spain have staged a moderate rally, with bankers noting that investor fears are focused on Portugal’s political outlook.
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Italian ferry operator Onorato Armatori on Friday sold €300m of secured notes as investors backed its plans for a new financial structure.
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Italy set bankers’ hearts aflutter this week with an early contender for deal of the year, breaking several records with a €9bn 30 year benchmark. But more importantly, the trade blasted open a hole at the long end that other sovereigns could pile through.
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