Italy

Balanced budget laws and government-backed refinancings are keeping Italy’s sub-sovereigns out of the bond markets, writes Phil Moore.

The Italian banking sector is adjusting to life in the new European regulatory landscape but the key senior unsecured and tier two markets are proving difficult for some. Virginia Furness reports.

The Italian Treasury enjoyed an enviable 2015, as for once the country’s political scene was a beacon of stability, at least compared to certain other European countries. That stability is one of the reasons cited for BTPs outperforming Spanish government debt in 2015 — while Spanish bonds suffered turbulence during a year of regional and general elections, Italy’s government looks like being the first in many years to survive a full term in office. With an executive that has been able to drive economic, legal and political reforms through a parliamentary system notorious for inducing stalemates, investors are hopeful that strong economic indicators could evolve into real growth in 2016. Italy is not immune to the forces that have disrupted markets and macroeconomic outlooks across Europe and beyond — from dwindling liquidity in secondary markets to banks leaving primary dealerships, and struggling emerging markets dampening demand for the country’s exports. But the country also has advantages that many of its European peers lack — not least the unflinching demand for government debt from its vast retail investor base that has allowed it to print some of the largest bonds ever seen in the government debt markets. GlobalCapital gathered together investors, bankers and representatives of Italy’s finance ministry to discuss the outlook for the country’s debt in the international bond markets.

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.