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Italy’s local appeal

Investment banks are eager to do debt deals involving derivatives with Italian local authorities. Such a high level of competition is good news for the borrowers but they are also facing closer regulation of their use of innovative structures. • Jennifer Morris reports

AT THE END of last year, Lehman Brothers held a client conference on derivatives in Milan. More than half of Italy's regional authorities sent a senior official to find out more. That's an impressive turn-out from a group of issuers that are still in the relatively early stages of their relationship with the capital markets, let alone doing anything more sophisticated.

Among those attending was Gianpierro Antonelli, CFO of the region of Umbria, which last year was the largest of the Italian regional issuers. He says he enjoyed the Lehman conference but probably won't be going to the next one this month. "The instruments Lehman was discussing were very sophisticated and might be interesting to other types of issuers. As far as we are concerned though, they have less appeal," Antonelli tells Euromoney at his office in Perugia, the regional capital.

That morning he had received a more appealing invitation to make a trip to Milan, from ABN Amro. This month, the Dutch bank will host a conference on local authority financing at which the agenda is also dominated by derivatives. One panel will focus specifically on using derivatives as a debt instrument for example. "This is more directly relevant to us," says Antonelli, waving the invitation card.

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