Italy

Italy received less interest for its second BTP Futura bond last week than its inaugural deal in the format earlier in the year.

Permanent TSB has picked banks to arrange the sale of a new additional tier one (AT1) from its holding company, a deal that could be used to replace the Irish lender's outstanding opco bond.

Italy held a series of investor calls on Thursday in preparation for a trip to the dollar bond market. Italy returned to the currency last year after almost a decade away, and announced that it intends to access the market every year.

The way the EU handles Banca Monte dei Paschi di Siena will yet again set a precedent for other struggling banks.

Banca Monte dei Paschi di Siena confirmed on Thursday that it was looking at options to strengthen its capital position, with the full support of the Italian government. Trading had already been heating up in its tier twos, as investors have been forced to consider whether a capital raise will require burden sharing under EU state aid rules.

Trading in Banca Monte dei Paschi di Siena’s tier twos has heated up this week, following reports the Italian lender is looking for a new capital raise as well as a merger deal.

Fresh lockdown restrictions added to a sense of anxiety in Europe at the start of the week, with credit markets already on tenterhooks ahead of the US presidential election.

Nearly half of Europe’s banks do not intend to participate in the next rounds of the Targeted Longer-Term Refinancing Operations (TLTRO III), according to the results of a new survey published by the European Central Bank this week.

Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, October 26. The source for secondary trading levels is ICE Data Services.

Italian government bonds rallied across the curve on Monday after S&P upgraded its outlook on the sovereign on Friday in response to the country’s extraordinary fiscal measures and support from the European Central Bank’s asset purchase programme and the European Union’s incoming recovery fund. The positive sentiment bodes well for the imminent publication of Italy’s green bond framework and plans to return to the dollar market in the coming weeks.

The strong momentum in the euro public sector bond market continued on Thursday with Italy receiving a huge reception for a new 30 year line, which was sold alongside a tender of various outstanding Italian government bonds.

Italy and the Province of Québec will add to the euro public sector supply on Thursday, hoping to capitalise on the strong momentum in the currency following the European Union’s record order book earlier in the week.