Italy

Italy and the European Investment received combined orders of over €50bn in the euro public sector market on Tuesday before what could be an even more uncertain period in Europe, with the UK parliament set to vote on prime minister Theresa May’s Brexit withdrawal agreement later in the evening.

Italy hit screens for a 15 year euro benchmark on Monday, in what will be the sovereign’s first syndication for a new issue since agreeing its 2019 budget with the European Commission at the end of last year. Elsewhere in the eurozone periphery, Greece is looking to return to the bond market with a euro syndication in the five year part of the curve, according to bankers.

On Friday, American data centre owner Digital Realty sold the first green corporate bond in euros of 2019, but investors did not have long to wait for the second one as Italian energy company Enel also chose to issue in the format.

Italy is planning to bring a euro syndication in the 15 year part of the curve later this month, according to market participants.

Credito Emiliano this week issued the first Obbligazioni Bancarie Garantite of the year, sending a strong signal to issuers struggling to fund in the senior market. The Italian bank followed Deutsche Bank SA which issued the first Spanish deal of 2019.

Telecom Italia attracted €4.5bn of orders on Tuesday, which was no mean feat, having to contend with a €4bn four-tranche Orange deal in the market on the same day, but also the uncertainty surrounding the Italian government and its budget hanging over the country’s economy. This, combined with the company’s Ba1/BB+/BBB- ratings, meant it had to offer what research house CreditSights saw as a 90bp premium to its secondary curve for the new 5.25 year deal.

Credito Emiliano has successfully issued the first Obbligazioni Bancarie Garantite of the year. Some bankers believe the bond issue sends a strong signal to issuers struggling to fund in the senior market and should therefore catalyse supply, but other have their doubts.

When it failed to notify investors it would call its 6.5% hybrid corporate bonds in December, Italian energy company Enel said it still intended to offer noteholders the opportunity to redeem the notes at par via a tender offer. It confirmed the tender offer earlier this week, but it is difficult to see why any investor would take it up.

Europe’s already enfeebled rules around bank failures would be dealt a crushing blow if the Italian state were allowed to use public money to prolong the life of Banca Carige.

While leveraged market participants expect loans to maintain their lead over fixed income in volume terms, some underwriters and lawyers believe market fatigue is beginning to make borrowers turn their attention to high yield bonds again.

UniCredit came to the dollar market on Tuesday, looking to sell a public senior non-preferred bond after its large private placement a few months ago. The bank was thought to be offering a large premium.

The Italian government has agreed to provide a guarantee for Banca Carige’s bonds, giving it a chance to shore up its liquidity position. The state has also put the option of a precautionary recapitalisation on the table.