Italy

Italy’s army of retail investors represent a big opportunity for asset managers and bond issuers alike, with high yield companies likely to receive the warmest reception of all. Phil Moore reports

With a €2.2tr debt mountain, Italy needs to keep the pressure on in its privatisation programme. 2015 has some some impressive successes, including the sale of a stake in CDP Reti to State Grid Corporation of China and the €3.4bn IPO of a minority stake in Poste Italiana, and there is plenty in the pipeline. Phil Moore reports.

Italy scored a string of remarkable successes in the bond market in 2015, issuing some of the largest long-dated syndicated deals of recent times and seeing its spreads tighten. And with structured reforms, political stability and a growing economy, the country looks set for an equally impressive 2016. Phil Moore reports

Economists have more reason to feel upbeat about Italy’s prospects now than in years, but a lot hinges on the prime minister’s reform agenda and the European Central Bank’s quantitative easing programme, writes Phil Moore

Italy’s economic outlook

In May 2013, Salvatore Rossi was appointed senior deputy governor of the Bank of Italy, where he has served since 1976. In this interview with GlobalCapital’s Phil Moore, he shares his views on the prospects for the Italian economy, banking industry and capital markets.

Over €30bn of covered bond supply is expected from borrowers in Spain and Italy next year but with nearly €40bn of Cédulas redeeming, the technical backdrop is most constructive in Spain.

Commerzbank this week became the latest bank to lose its place on a sovereign’s list of primary dealerships, raising a familiar, weary groan from SSA bankers worried about the future of the model — but the head of a major eurozone sovereign has said that issuers are on the banks’ side.

Italy could soon ban banks from selling subordinated debt to retail investors, heaping pressure on funding costs and potentially eliminating a large portion of the industry’s investor base. Tyler Davies reports.

Obbligazioni Bancarie Garantite supply of anywhere between €10bn and €15bn is expected by analysts in 2016, meaning Italy will be the fourth largest issuance region for euro covered bonds next year. House prices are bottoming out and positive economic growth is likely for the first time in years. Though non-performing loans are unsettlingly high, they should peak in 2016, suggesting that the overall picture is starting to look encouraging.

Loans are the last bastion of European corporate finance activity, as the rest of the market falls to Federal Reserve trepidation. But the right message from the Fed could open the door for small, opportunistic trades.

Corporate borrowers in peripheral Europe have a golden opportunity to borrow thanks to the ECB’s targeted long term refinancing operation (TLTRO) help for banks – stalling the march towards bond and private placement predominance.