Italy

Italian cigar maker Sigaro Toscano has postponed its Milan IPO because of stock market volatility.

Italian government bonds enjoyed a strong start to Wednesday morning as investors digested talk that the country’s budget plans could be less spending heavy than previously thought. But the buy-side was sceptical that Italy’s populist government will stick to the plans — and BTPs had already retraced some of their earlier gains by the late morning.

Italy’s latest political drama is making investors nervous, and rightly so — when the leader of a country’s main governing party accuses European leaders of market ‘terrorism’, in the vein of an ‘EU equals the USSR’ conspiracy theorist, then you’d be right to dump its bonds. But the steadiness of Spanish and Portuguese govvies through all this shows not only that the term ‘eurozone periphery’ may have to be consigned to the historical dustbin, but that the firewalls erected by those same European leaders after the last sovereign debt crisis are standing firm.

Italy’s announcement that it plans to overshoot the European Commission’s budget deficit limit has spooked markets at a crucial time for the country’s banks.

The Italian cabinet has agreed upon a budget deficit target of 2.4% of GDP for the next three years, rejecting the finance minister’s 1.6% target proposal, causing Italian assets to sell off.

The appeal of populist, often nativist, agenda to electorates disgruntled with economic stagnation and rapid demographic change has been underestimated in recent years — not least by bond markets.

Negotiations over Italy’s 2019 budget deficit looked set to go down to the wire as GlobalCapital went to press on Thursday night, with the outcome likely to have a large bearing on the sovereign’s future issuance costs.

Banca Carige has shaken up its management team and is preparing to return to the European Central Bank with a new plan for keeping its capital ratios in check. But the troubled Italian lender is going to have its work cut out in accessing the debt or equity markets before the end of the year, with a whole host of its peers waiting to do the same, write Tyler Davies and Sam Kerr.

If Banca Carige cannot raise capital or find an acquirer, it should be put out of its misery.

Italian government bond yields jumped around as jittery investors digested another day of conflicting messages from the country’s government, ahead of an expected announcement on the 2019 budget later on Thursday. But even if the deficit plans meet investors’ hopes, there may not be a large BTP rally, said SSA bankers.

Mediobanca has privately placed a €250m tap of its Obbligazioni Bancarie Garantite six year deal issued in July.

Two Italian IPOs are being marketed to investors this week and bankers are hoping that the release of the government’s updated stability programme on Thursday will not scupper the deal processes.