UniCredit

The last time a newly rated Italian issuer tried to issue a corporate high yield bond was in May — but take a step back and the wider picture points at a resilient, vibrant market with an investor base up for the challenge. Victor Jimenez reports.

Italian banks have come through a challenging year as pressures — from regulators, markets and the economy — waxed and waned. Issuers and investors have had to navigate the looming introduction of the Bank Recovery and Resolution Directive, Total Loss Absorbing Capacity and Minimum Requirement for own funds and Eligible Liabilities, which have changed the dynamics between senior unsecured paper, covered bonds and capital issuance. The Italian market also felt one of the strongest impacts in the eurozone from the European Central Bank’s quantitative easing programme, which provided cheap liquidity and tightened issuance spreads, but in some cases appeared to drive investors away and into higher-yielding asset classes. Meanwhile, an economy clawing its way back to health continued to impose a heavy burden of non-performing loans, and legislative reforms left smaller players in the sector looking for merger partners. In this roundtable, held in early December, leading funding officials and bankers gathered to discuss these issues and more.

Europe gains traction on domestic demand: we like risky assets and see limited euro downside

Wind turbine company Nordex signed €1.4bn in loans on Tuesday. The five bookrunners flexed to accommodate a planned acquisition, in what was intended to be a plain refinancing.

Italian oil drilling company Saipem has revealed its bank group following the company's debut loan syndication.

Italian oil refinery company Saras signed a €265m loan on December 10, cutting its margin on the refinanced facility by about 150bp.

UniCredit has appointed a new head of funding as part of an internal reorganisation.

Russian steel company Evraz raised $750m from a bond that was printed tight to secondary levels on Thursday as it benefited from huge pent up demand for Russian corporate paper, even in a volatile market for metals and mining firms.

Since the 2008 financial crisis, for a number of years subdued activity in IPOs was believed to be the norm on Italian exchanges. Yet since 2014, political and economic trends are changing the script — prompting a boom in Italian IPO activity, according to Stefania Godoli, global head of equity capital markets at UniCredit.

Intesa Sanpaolo issued a €1.25bn 10 year covered bond on Wednesday, a transaction that did not initially seem to be an obvious trade, but which in the end proved very successful.

UniCredit’s German subsidiary HypoVereinsbank (HVB) priced a well oversubscribed four year mortgage covered bond this week in the wake of CIBC's strong reception in the three year tenor.

The covered bond market experienced a surge in supply this week, confounding expectations, and illustrating how important it is for issuers to seize unusual funding opportunities.