Italy
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Intesa Sanpaolo issued a €1bn senior bond on Thursday as it looked to get ahead of other banks, while its main competitor, UniCredit, considers doing more this year. -
On Thursday Intesa Sanpaolo become the first Italian bank to issue an unsecured bond since April, but it paid up to do so. It has led the way for the country’s banks in terms of issuance this year, having already printed both the first unsecured bond and the first covered bond since the general election.
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Mediobanca could look to buy an advisory boutique in its quest to become a pan-European corporate finance house, writes David Rothnie.
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The sovereign credit crisis spurred lawmakers to undertake a number of major initiatives designed to sever the ‘doom loop’ — the link between sovereign and bank credit risk. Recent events in Italy and Turkey show the limits of these policies, but not their impotence.
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Concerns over the upcoming budget from Italy’s populist government — as well as the months’ long economic crisis in Turkey — took its toll on government bond yields in the eurozone periphery this week. But a hunt for safe assets among investors did play into the hands of top tier credits.
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KfW received solid demand for its €1bn global June 2020 benchmark tap on Tuesday, as investors lapped up the rising swap spreads caused by political tensions in Italy and economic crisis Turkey, and looked for safe assets.
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Moody’s downgraded Banca Carige’s residential mortgage backed covered bonds this week, but kept them in investment grade territory. Spreads barely moved in the aftermath, suggesting investors have already sold their exposure.
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Italian construction group Astaldi’s bonds have taken a beating on concerns that its exposure to Turkish risk could derail plans for injection of needed capital. For some high yield investors, it also is a reminder of market vulnerabilities ahead.
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Giancarlo Giorgetti, undersecretary to the Italian prime minister, has said that he expects the country to suffer an “attack” in the financial markets by the end of the month.
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The Bank of Italy’s (BoI) proposal to loosen Obbligazioni Bancarie Garantite (OBG) issuance restrictions should be credit positive for the country’s small banks said Fitch in a report on Friday. Despite that, an improvement in distributed supply may prove limited.
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The Italian banking sector could be hurtling towards another crisis this autumn, with the government’s budget negotiations expected to put pressure on the bond market, worsening funding conditions for banks, write Jasper Cox and Bill Thornhill.
