Italy
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Shares in UniCredit, Italy’s largest bank by assets, closed 8.1% higher on Thursday after the bank cut its stake in Turkey’s Yapi Kredi, while announcing a dividend increase and a share buy-back. -
Italy’s government is seeking help from the equity capital markets to spur the country’s ambitious plans for a greener economy. Sources say the market is ready to support this effort.
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Bonds sold by Banca Monte dei Paschi di Siena were surging higher in secondary market trading this week, amid reports that the Italian bank was close to agreeing plans to offload a €10bn portfolio of non-performing loans.
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Cassa Depositi e Prestiti will come to market on Tuesday with a 10 year euro benchmark financing social housing projects in Italy.
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The cost of insuring against default on Italian bank bonds has fallen to its lowest point in over a year, after investors embraced the result of recent regional elections in the country.
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Banca Monte dei Paschi di Siena wrapped up its second deal of the month on Tuesday, capping off a busy period for Italian deal flow in advance of important regional elections.
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Investors have been showing a clear preference for subordinated bank bonds in the primary market, with the valuations for more senior asset classes having been squeezed into extraordinarily tight levels in 2020.
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Banca Monte dei Paschi di Siena was marketing a new senior bond in the euro market on Tuesday, a matter of days after it completed its capital raising plan with a tier two sold at 8%.
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A triple-A rated supranational and two sovereigns from the eurozone periphery took the opportunity to lock in low rates at the long end this week, amid strong market conditions. SSA bankers expect more supply to follow at this part of the curve over the coming weeks, including from France and potentially Greece.
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Italian banks took over the financial institutions bond market this week, enjoying a much lower cost of funding and capital than they have been accustomed to in recent years. The sector will look to make good use of favourable issuance windows in 2020, as it moves inch by inch towards a more positive outlook.
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The stars have aligned for Banca Monte dei Paschi di Siena following its rescue by the Italian state. It is hard to see how other banks could be so fortunate.
