Italy

Cyclical or structural? This is a question which I have often been asked about Italy’s economic recovery. Italy began showing some first signs of recovery in 2014, a year in which Italy posted a 0.1% increase in GDP after a double-dip recession between 2009-2013 which led to a 10% drop in the country’s output. In the following years the recovery grew stronger and now the economy is growing at a rate similar to that of other euro-area countries.

The investment grade corporate bond market started February with the second busiest day of 2018 so far, picking up after a relatively quiet January. Acea, Ford and Prosegur Cia de Seguridad, sold five tranches between them, including two floating rate notes (FRNs), on the first day of the new month.

The investment grade corporate bond market has started February with intent, with Thursday registering as the second busiest day of 2018 so far.

The euro market is taking a breather as a frenetic January draws to a close. But one borrower hit screens and launched a deal on Wednesday, while the European Financial Stability Facility (EFSF) sent out a request for proposals for next week.

Italian toll road operator Società Iniziative Autostradali e Servizi (SIAS) followed a four day investor roadshow with its third 10 year bond this week. A €1.9bn order book allowed the company to print its largest ever deal at a much tighter spread than its previous two offerings.

When talking to syndicate managers or investors about the first month of 2018, you may think that supply volumes in the euro investment grade corporate bond market have been unusually low. However, a comparison of previous January issuance levels suggests it has been a much more normal start to the year.

Italy’s leading gas distribution company Italgas was the latest issuer to benefit from the lack of corporate bond supply so far in 2018, tapping a deal on Tuesday. Investors, starved of paper, have caused order books to be multiple times oversubscribed and issuers have benefited from tight pricing as a result.

Italian tyre company Pirelli returned to the bond market on Monday for the first time since its IPO. With no other investment grade deals in the market, the new five year transaction enjoyed strong investor demand and 40bp of tightening from initial price thoughts.

Italo, the private Italian operator of high speed trains founded by a former chairman of Ferrari, has announced its intention to float on Borsa Italiana, offering investors a “unique” opportunity to play the high speed rail market in Europe, according to a banker involved.

On Tuesday, Italgas was the latest issuer to benefit from the lack of corporate bond supply so far in 2018. Investors, starved of paper, have caused order books to be multiple times oversubscribed and issuers have benefitted from tight pricing as a result.

On Monday, Italian tyre company Pirelli returned to the bond market for the first time since its IPO. With no other investment grade deals in the market, the new five year transaction saw strong investor demand and 40bp of tightening from initial price thoughts.

Banca Popolare di Milano (BPM) successfully issued its first covered bond transaction since June 2016 with the high spread overcoming credit quality and volatility concerns.