Italy's corporate bond market is set to undergo rapid development, according to Moody's, the ratings agency. Despite the fact that Italy remains the largest contributor in western Europe to the total of unrated outstanding corporate debt securities, every Italian issuer of public debt in 2003 has so far been a rated company. But obstacles, such as a lack of development, still remain.
"The recent default of a prominent Italian corporate, Cirio, has refocused the bond market on credit and its relative importance to investors in the overall context of the risk-reward balance," notes Stefano Zeni, a senior analyst at Moody's.
Greater credit discipline has been noticed in Italy's corporate debt world, however, the relatively undeveloped nature of Italy's capital markets means any future progression is unclear. Italy's market lags behind much of western Europe in terms of volumes and the number of issues.
Zeni continues: "In the first five months of 2003, approximately €5.5 billion worth of corporate bonds were issued by Italian companies, compared with a total issuance of €25 billion for the whole of the previous two years."
On a more positive note, Moody's adds that Italian corporate involvement in capital markets is set to rise to levels commonly seen in more developed markets, and that utilities and construction corporates, among others, are the most obvious candidates to tap capital markets.