Italy

Italy’s coalition government is taking investors on a wild ride, with different voices emanating from the populist grouping quickly shifting sentiment among the buy-side. But the juicy spreads the sovereign offers over its peers has helped provide some respite from the sell-offs, said analysts.

Italian FIG supply is likely to remain limited over the rest of this year as Parliamentary budget negotiations and concerns over the presentation of Banca Carige’s capital conservation plan raise deal execution risk. However, one or two covered bond deals cannot be ruled out.

Banca Carige’s covered bonds could soon be downgraded by Moody’s to sub-investment grade territory but, given the size and quality of the collateral pool, further downgrades could present a buying opportunity.

Italy’s coalition government is taking investors on a wild ride, with different voices emanating from the populist grouping quickly shifting sentiment among the buy side. But the juicy spreads the sovereign offers over its peers has helped provide some respite from the sell-offs, said analysts.

Italy’s new coalition government has not been kind to its equity capital markets, with IPOs especially hindered by uncertainty. Unless there is a dramatic change, ECM bankers do not expect much improvement in the autumn.

Green Italian bond supply has good scope to grow, and banks are likely to play a central role in the rise, according to Standard and Poor’s. Given the old age of Italy’s building stock and the importance of financing for small and medium-sized enterprises (SMEs), green covered bonds and green European Secured Notes could play a vital part.

BTPs sold off on Friday morning ahead of the Italian government’s crucial 2019 budget review, with yields reaching their highest level in two months.

French laboratory testing company Eurofins Scientific and Italian tyre company Pirelli have closed Schuldscheine totalling more than €1bn in the past week.

Carige’s postponed tier two deal is central to its recovery plan and therefore its future, a letter from the European Central Bank suggests. But at present that transaction looks like it will be very hard to complete.

Italian companies are enjoying some time in the loan market sun this week, with facilities for Amplifon, Tecnimont and Tages Helios finding solid support from lenders.

Hearing aid company Amplifon will buy Spain’s GAES Group in a fully debt-funded acquisition with a €528m enterprise value as Italian companies extend their strong run in the loan market.

Rewables fund Tages Helios has taken out five credit lines totalling €452.5m from a syndicate of banks to refinance a portfolio of solar plants, as Italian names continue to win capital markets support despite some investors' distaste for the political direction of the country.