Italy

Banco BPM unveiled an ambitious new strategic plan this week, accounting for the potential impact of Covid-19 in northern Italy. The bank intends to reduce its reliance on the European Central Bank (ECB) for funding and take advantage of regulatory changes allowing additional tier one to be included in Pillar 2 capital requirements.

The negative impact of the new coronavirus on Italian covered bonds and CMBS is limited so far, said Moody’s and DBRS in reports published on Friday and Monday. But if the outbreak spreads, the ability to repay covered bonds would be impeded with serious consequences.

UK insurer Hiscox said on Monday that it had received some ‘small claims’ relating to Covid-19, as credit analysts warned that the insurance sector was exposed to indirect impacts from the spread of the virus.

Market participants should be braced for political volatility as the world comes close to experiencing a pandemic.

The spread of the Covid-19 coronavirus outbreak is grounding equity capital markets banks attempting to win business as face-to-face meetings are cancelled. This week SIA, the Italian payments company, said that banks pitching to win the mandate for its IPO could do so over the phone or by video call rather than travel to Milan.

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, February 24. The source for secondary trading levels is ICE Data Services.

Credit spreads lurched wider at the beginning of the week, with investors reacting to reports of further cases of the Covid-19 coronavirus outside of China. The reaction fell short of panic, but bankers said that some issuers were moving to delay their plans for bond deals.

SIA, the state-controlled Italian payments company, is pushing ahead with plans for a listing in Milan this year, according to sources, if the Covid-19 coronavirus does not destroy sentiment for Italian equities.

Rating: Baa1/BB-/B+

Equity capital markets bankers have welcomed the return of rights issues as the total volume of underwritten equity raises announced year-to-date ramps up. Now, they are thirsty for more.

Banca IFIS sold a senior bond this week, as Italian bank bond spreads rallied following Intesa Sanpaolo’s takeover bid for UBI Banca.

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, February 17. The source for secondary trading levels is ICE Data Services.