Italy

The European Central Bank has given Banca Carige the all-clear to try and carry out its latest plans to turn itself around. The ailing Italian lender said on Monday that its next step will be to ask its shareholders for their approval at a meeting next month.

An impressive rally in Italian risk assets has been completely overturned this week, as Italy descended into political chaos. Some market participants now fear a repeat of last year, when Italian issuers were frozen out of debt and equity markets as the country’s government fought with the European Commission over its annual budget targets. Tyler Davies and Sam Kerr report.

Political chaos in Italy disguises the progress made turning around the country’s banking sector.

Disruption in Italian politics has punished the BTP market this week as the country heads towards a possible autumn general election.

Rising expectations of a snap Italian election before the end of the year are threatening to send the spread between 10 year Bunds and BTPs wider by as much as 250bp, according to analysts.

Issuers are set to gravitate towards selling higher yielding regulatory debt in the post-summer issuance window, so that they can attract investors and compensate for low overall interest rates. But FIG bankers are unsure what concessions will be needed to get deals away.

Shares in doValue, Europe’s largest corporate servicer of non-performing loans (NPLs), were snapped up during a €52.3m accelerated share sale on Wednesday night, sold by Eurocastle.

Lloyds Bank dipped into dollars for senior funding on Wednesday, a day after UBS launched a deal in the same currency. A syndicate official noted that European financial institutions are being tempted across the Atlantic amid more inhospitable conditions in the euro market this summer.

Luxury sports car company Ferrari has sold €300m of US private placement notes, according to an SEC filing on Friday. Its debut offering is one of only a handful of transactions from the auto sector to reach the market.

Italy’s Cassa Depositi e Prestiti printed a long-awaited Rmb1bn ($145m) inaugural Panda bond on Wednesday, with the modest issuance size revealing the roadblocks still facing the nascent debt market, writes Rebecca Feng.

Holders of Banca Monte dei Paschi di Siena’s €300m 10 year tier two have already been burned in the secondary market, with the price of the bonds having plummeted since their initial sale on July 16.

Banca Carige has plans to convert its tier two bonds into equity and raise €900m of fresh capital, as it looks to turn itself around and avoid the need for a bail-out from the Italian state.