Sovereign Debt: Audacious Italy astounds all
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Sovereign Debt: Audacious Italy astounds all

Sovereign has shown it retains access to the capital markets despite political and economic woes.

Cannata: positively surprised by
investor response

The Republic of Italy launched a €6 billion 30-year transaction in October against an inauspicious backdrop. The deal had been talked about since the start of the year and many market observers concluded that Italy had missed its window of opportunity. The trade was especially bold because the news surrounding Italy has been far from positive in recent months. Standard & Poor’s signalled that the sovereign would struggle to remain a double-A rated credit. Then there is the fallout over Banca Popolare Italiana’s attempted purchase of Antonveneta. The central bank governor refused to resign after he was accused of favouring BPI’s bid; the finance minister decided this was intolerable, so himself quit. And a public spat between the replacement finance minister and the central bank governor at the IMF/World Bank meetings overshadowed all else. Maria Cannata, director general of the public debt management office at the Italian treasury, explains the timing of the issue. “At the beginning of the year we thought the market was extraordinarily crowded with supply of long-dated bonds,” she says. Difficult market conditions in April and May further reduced options.

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