Italy

Mediobanca attracted strong demand on Monday for a long seven year Obbligazioni Bancarie Garantite (OBG), which offered an eye-catching yield despite pricing well through BTPs. The deal emerged as the short end of the covered bond curve plunged deeper into negative yielding territory.

UniCredit made the unusual decision of adding a one year call option to a preferred senior bond on Tuesday, nodding towards the bond’s potential value as total loss-absorbing capacity (TLAC). The Italian bank won strong support on a day when dovish central bank comments were fuelling a big rally in the value of risk assets.

Giovanni Tria, Italy’s minister of economy and finance, rebuffed the chances of a controversial ‘Mini BOT’ financial instrument coming into effect, as he gave a keynote address at the start of Euromoney's Global Borrowers and Bond Investors Forum in London on Tuesday.

Aegon Bank and Banco BPM each hit the euro market on Friday and launched €500m of debt in senior formats, following a week of prosperous conditions and successful deals.

Rating: BBB/Baa3

Italian equities bankers wondering what deals to bring from a country where the political situation is a constant threat to smooth issuance have been inspired by the recent UK listing of a luxury retailer. Sam Kerr reports.

Commerzbank, Jyske Bank and UBI Banca all issued €500m senior non-preferred bonds with five year maturities on Thursday. But Jyske opted for a more flexible and efficient note, callable four years after its issuance date.

Investors piled into deals for Spain and Italy on Wednesday despite the miniscule yields on offer, as the spectre of further easing of monetary policy looms large over the market.

Italy has surprised the market by hitting screens with a new 20 year euro benchmark trade while it is facing disciplinary action from the European Union for having excessive debt.

Investors are being forced towards riskier instruments for better returns, with safer assets looking expensive.

Italy’s parliament stunned the capital markets this week when it waved through a radical motion to explore issuing securities that resemble a parallel currency to the euro, in a development that has been met with almost universal derision. Frank Jackman, Lewis McLellan and Mike Turner report.

The European Central Bank’s (ECB) is expected to announce new policies on Thursday which, according to a fixed income strategist, will be positive for financial institution credits.