UniCredit

Financial institutions are waiting for an all-clear signal in the primary market for unsecured debt, after an Italy-led meltdown cast new issue execution and pricing in doubt this week.

Investors and analysts are assessing Italian banks in light of the fall in their capital ratios resulting from their exposure to sovereign debt.

Hera, the Italian utility, has signed a green revolving credit facility, laying claim to bringing the first such deal from the country, amid a wave of environmentally conscious loans spearheaded by southern Europe.

Bond market havoc following the Italian president’s decision to appoint a technocratic government has shut the euro market for most public sector borrowers. Volatile swap spreads are making issuance near impossible, while an “enormous” flattening in Italy’s curve is of particular concern for that sovereign, said one head of SSA syndicate.

French car company Groupe PSA has amended its €3bn revolving credit facility, stretching out the maturity out by five years.

Italy’s Assicurazioni Generali has added sustainable features to its refinanced revolving credit line, as Italy’s largest insurance firm joins the growing number of borrowers pursuing green loan funding.

Investors have been reducing their exposures to risk in financial markets this week, after Italian president Sergio Mattarella helped to set the country on a course towards fresh elections.

German energy supplier Innogy found the corporate bond market tough going for its latest new issue, despite marketing its deal for two days. However, it did execute the deal in a week that saw two corporate bond deals pulled, and despite an M&A shadow hanging over the company.

On Wednesday, US electrical appliance manufacturer Whirlpool became the second investment grade corporate borrower to pull a deal in a week. German energy company Innogy and Whirlpool both found the corporate bond market tough going on Wednesday, despite having employed two-day marketing strategies. Whirlpool, however, took the hardest hit.

As investors take shelter from the incoming Italian administration by selling the capital instruments of the country’s banks, one security outperformed this week. UniCredit’s convertible and subordinated hybrid equity-linked securities (Cashes) traded up at the beginning of the week as investors assess how likely it is that the bank will have to remove the instrument from its capital stack.

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.

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.