Italy
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Investors dumped BTPs this week as far from market-friendly plans emerged from talks this week between the Five Star Movement and the Northern League, which looked set to form a government as GlobalCapital went to press. But there were still some notes of optimism as Italy sold the latest line of its BTP Italia product with little fuss and bankers said BTP yields were still very far from crisis levels. -
A populist coalition poised to take power in Italy sent shudders across markets this week, with the concerns going well beyond BTPs and Italian corporates to spill into other countries and raise questions over the future of eurozone capital markets unity. Craig McGlashan, Jasper Cox and Sam Kerr report.
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Italian energy company Enel sold €1.25bn of new hybrid bonds this week to help fund the repurchase of its hybrids with 2019 and 2020 call dates.
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Italian bank debt was in the firing line this week, after investors became fearful of the country’s political situation for the first time since the election in March.
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Sometimes, investors get hit by political events that come out of nowhere. Other times, they walk straight into an oncoming freight train, even though it's blowing its horn at top volume.
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Italian equity markets remain volatile as details of a coalition agreement between the Five Star Movement and Northern League emerge, but ECM bankers are less confident that the volatility will harm Italian IPOs.
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Italy’s political situation may be making investors nervous but the sovereign this week sold the latest line of its BTP Italia product with little fuss — although the domestic skew on the bond makes it a poor barometer of international faith in the credit.
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Investors moved to reduce their positions in Italian bank bonds after a leaked document on Tuesday night showed that the Five Star Movement and Lega parties were considering introducing a number of controversial policies should they enter into a governing coalition.
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A leaked draft of a coalition agreement between Five Star and the Northern League, which are in discussions over forming a government in Italy, caused investors to dump Italian debt, blowing BTP yields out by 9bp.
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News that populist parties in Italy could be positioning to defy Europe over spending and debt levels has rattled some participants, causing some to change their strategies with derivatives.
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On Tuesday, Italian energy company Enel sold €1.25bn of new hybrid bonds to help fund the repurchase of its hybrids with 2019 and 2020 call dates. The buyback was announced after the firm’s chief financial officer announced that the company would refinance up to €3.5bn of hybrids at a cost of about 3.5%.
