Italy
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Financial institutions are set to spend the summer months monitoring conditions for issuance in order to continue funding this year or to frontload funding needs for next year, according to deal arrangers. -
The European Commission’s best practice guidelines for the financial sector in handling the coronavirus crisis may challenge the safety mechanisms embedded in covered bonds, which have become fundamentally overvalued — especially in countries like Italy where payment holidays have been widely taken up — thereby instigating a sell recommendation from analysts at Barclays.
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Italy’s €178bn covered bond market comprises a wide variety of structural nuances that are likely to prove critical to understanding underlying risks, especially when it comes to the way swaps are used and the methodology for asset coverage (ACT) and amortisation tests (AMT), said Moody’s this week.
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Following the sale of its first government bond targeted exclusively to retail investors last week, Italy may issue another such bond before the end of the year, depending on the evolution of its funding needs, which are still not finalised.
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UniCredit attracted plenty of demand for a €1.25bn sale of non-preferred senior debt in euros on Wednesday, as issuers took advantage of strong funding conditions ahead of the summer period.
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Italy did not set the world alight with the sale of its first government bond targeted exclusively to retail investors. The proceeds will be used to finance measures related to Italy's post-Covid-19 economic recovery.
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Insurance companies saw a favourable window of opportunity this week to sell subordinated debt. Assicurazioni Generali, Crédit Agricole Assurances and CCR Re benefited from the supportive backdrop to raise tier two bonds.
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Italy's AMCO Asset Management capitalised on strong investor demand to launch a dual tranche deal in senior format on Thursday, attracting a wide range of investors, according to one of the lead managers.
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Amco Asset Management is looking to join the list of banks looking to print bonds in the rush to issue before earnings blackouts begin.
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Assicurazioni Generali launched a greent tier two capital bond in euros on Monday, confirming the appetite for riskier products across bank capital. The new deal left no premium on the table as the issuer capitalised on demand for green subordinated debt.
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After UBI Banca said that it would not be taking up Intesa Sanpaolo’s acquisition offer because it was too risky for UBI’s shareholders, Intesa said on Monday that the value of the offer is higher than its target believes.
