Italy

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.

First it was a pair of car finance issuers. Then came a pair of utilities. And on Tuesday it was a pair of telecoms companies that came to the corporate bond market. But the latest couple really got investors revved up with more than €16.5bn of orders placed.

The European Central Bank is giving Banca Carige yet more time to boost its capital. If the lender cannot turn itself around, authorities will regret dithering while the private sector walked away.