Italy

An awful lot of capital and financial market participants are relaxed about Sunday's Italian election, predicting that coalitions and deadlock will remain a staple of Italy's political system. But others urge caution — and hedging — while the going is good for fear that complacency is taking hold, writes Costas Mourselas.

The issues surrounding Italy’s debt burden refuse to go away, but not all market participants believe that a change of government on Sunday would be able to stall or reverse the country’s recent economic progress.

This weekend’s Italian general election promises to be another mesmerising episode in the soap opera of Italian politics, but equity markets are largely confident that the work done to shore up the Italian banking system will be enough to offset any shock result on Sunday.

Investor worries about this Sunday's election in Italy have not materialised yet in terms of having an affect upon fear gauges and hedging activity with both subdued, especially when compared to notable European elections from last year.

Italy could retrieve half of the basis points it has lost to Spain in the run-up its general election next weekend — if the vote returns the most market-friendly result, according to a portfolio manager at a leading investment house. Spain, meanwhile, printed a 30 year benchmark with the second largest book ever for a euro sovereign deal in the tenor — another sign that the country is marching towards or already at semi-core status, said bankers.

Italy could retrieve half of the basis points it has lost to Spain in the run-up its general election next weekend — if the vote returns the most market friendly result, according to a portfolio manager at a leading investment house.

Intesa Sanpaolo has overcome Japanese concerns about Italy to become the first ever Italian bank to sell a Tokyo Pro-Bond.

The equity blocks market in EMEA reopened after Presidents Day on Tuesday night with trades in WPP, the UK advertising agency, and Banca Farmafactoring.

National Australia Bank (NAB) and Société Générale issued Swiss franc bonds on Wednesday with tight pricing, in a sign that the market is luring financial borrowers to print opportunistically.

Beni Stabili printed a “gutsy” investment grade corporate trade at the start of the week. The BBB- rated Italian firm managed to attract investors despite plenty of background noise, though bankers said it may send other prospective issuers mixed messages.

Creval, the Italian bank, has kicked off its fully underwritten €699m rights issue, having announced the price range late on Wednesday evening.

Mediobanca is selling five year senior preferred Swiss franc bonds, one day after National Australia Bank (NAB) and Société Générale raised funding in the market. Cross-currency basis swaps are improving for foreign issuers in Swiss francs, and interest rates are rising — which means there a more windows for banks to place opportunistic bonds.