Italy

The Italian retail bond market is going through a major shake-up in which alternative investments are set to replace bank bonds among the securities of choice for Italian households. Tyler Davies reports.

Italy has weathered, with remarkable resilience, a turbulent year in European politics. While it still faces its own turmoils — an approaching parliamentary election in particular — its recovering economy and process of economic and political reforms have given investors the confidence to put money to work in Italian assets. The next 12 months will see the ECB reducing its quantitative easing programme and a host of new regulatory challenges, but the Italian treasury is confident that it, and the banks with which it works, will be able to adapt to the new challenges and opportunities 2018 holds.

Banca Carige's largest shareholder, Malacalza Investimenti, has subscribed for another €25m of shares in the bank, about 36% of those that were available to it under an option it held. This means Carige will raise €544m in its capital increase.

Holders of the rights auctioned in the rump sale after Banca Carige's rights issue have subscribed for only €22.8m of the €167m of shares available to them. The largest shareholder has 12 hours to exercise an option to buy €69.5m of the remainder.

Enel, the Italian electricity and gas company, has signed a €10bn syndicated loan to refinance a facility from 2015, with pricing 27.5bp tighter.

The rump auction following the rights issue of Banca Carige, the Genoese bank, was closed early after two days on Monday, but participants in the deal have to wait till Thursday to find out how many of the buyers will subscribe for the up to €167m of shares.

Public sector debt bankers and fellow debt management office heads have lined up to praise the impact on the Italian and wider European sovereign debt markets of Italy funding head Maria Cannata, who is retiring after nearly three decades at the country’s Treasury. While universally agreeing that she would be greatly missed both professionally and personally — including her sense of humour — there was also strong confidence that the team she has put in place will be able to meet all Italy’s future challenges.

Ignazio Visco, the governor of the Bank of Italy, told lawmakers in Rome this week that Europe’s bank rescue rules did not help with the ‘speed and effectiveness’ of dealing with the country’s recent banking crises.

Italian sovereign green bond issuance could be scuppered by risk monitoring difficulties arising from the regional complexities of the country.

Maria Cannata of the Italian Tesoro, one of the sovereign bond market’s best known and longest serving funding heads, is to retire, just after the new year.

The US Federal Reserve raised its target rate to 125bp-150bp this week in a move investors and analysts widely expected, but there was still a small rally in US Treasury yields as some of the central bank’s projections hinted at what analysts called a “Goldilocks scenario for bonds”. That is likely to be welcomed in the offices of one sovereign issuer, which is planning a return to the dollar market after a long absence.

UniCredit was able to sell a new additional tier one (AT1) at close to fair value this week, after updating the market about its progress with its strategic plan at a conference in London.