Italy

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%.

Rating: Baa1/A/A-

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.

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.

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.

Mediobanca was greeted with €4bn of demand for its debut offering of non-preferred senior notes on Thursday, extending a run of Italian bond deals in the euro market this week.

Italy and Belgium were the latest eurozone sovereigns to build their largest ever order books for syndicated bonds on Wednesday, with the former coming close to breaking the record demand from a eurozone issuer set by Spain on Tuesday.

Banca Monte dei Paschi di Siena was more than two times subscribed for a €400m tier two on Wednesday, as the state-backed Italian lender used strong market conditions to finally complete the last leg of its capital raising plan.

Spain and Cyprus attracted strong demand for their syndicated bonds on Tuesday, with the former receiving the largest ever order book for a public sector euro benchmark. Italy and Belgium will add to the eurozone sovereign supply on Wednesday after mandating leads for new 30 and 10 year trades, respectively.

The only thing missing from a stellar start to 2020 is a capital transaction from Italy’s Banca Monte dei Paschi di Siena.

Banco BPM did not need to pay a new issue premium to follow UBI Banca with the sale of an additional tier one (AT1) on Tuesday, as Italian banks make the most of an 'issuer's market' at the beginning of 2020.

Italian construction giant Salini Impregilo offered to exchange its 3.75% notes, due in 2021, to new non-call life senior notes, maturing in seven years. The €250m deal is set to be completed by Friday this week with initial price thoughts of 3.875% — indicating that Salini may have lost favour among investors and will have to pay extra to extend maturities.