Posts tagged 'Italy'

Saving Italy’s banks

How long has the Italian banking system been in trouble? Seriously? Why has no-one supposedly in charge come up with a proper plan?

Instead, Italian bank stocks ping around, up and down every day, like penny dreadfuls reacting to the latest speculation of a political fix or some sort of blind eye treatment from Brussels. Witness Unicredit — up 14 per cent or so at pixel, having previously fallen by a third over the preceding three weeks as the latest stage of this eight-year-old crisis has intensified:

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Italian banks, this is euro area politics. We think you already know each other? [UPDATED]

Italian banks are a problem. Post-Brexit they’re a serious problem.

A full recap of said banking sector and its estimated €200bn of gross non-performing loans would, according to JPM, “require up to €40 billion (less than 2.5% of GDP)”.

Manageable, say JPM again, “given the current Italian fiscal position and sovereign cost of funding.”

Only problem is… Read more

When countries go bankrupt

Alphachat is available on Acast, iTunes and Stitcher.

Going bust is painful. But when you are a country it is particularly awful.

While people and companies have recourse to established legal frameworks that govern their bankruptcies, struggling countries have to tackle debts in what is close to a legal limbo.

As a result, both countries and their creditors are uniquely vulnerable. The former have no formal bankruptcy protection that it can use for an orderly restructuring of its debts, but the latter have few ways to compel a stubborn state to heel (at least in the post-gunboat diplomacy era). The result is a delicate balance — and when it breaks down, it can lead to an unholy mess. Read more

Project Atlas (in Italian)

The presentation deck for the €5bn plan to prop up Italy’s weaker lenders has leaked to Economia Il Messaggero. Click to read:

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Guest post: Do IMF-set primary surplus targets for the EZ periphery pass the smell test?

Spoiler alert. In this guest post, former IMF staffer Peter Doyle, argues that some participants in the on-going Greek crisis might be suffering from anosmia…

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Euro area divergence more about regions than countries

Take a good long look at this map:

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Which euro area countries have been driving household spending growth?

Handy chart from CreditSights illustrating the changing fortunes of euro area households over the past couple of years:

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Extend and fund, Italy edition

Ahead of the announcement of details for next week’s Italian Treasury auctions later on Wednesday, a reminder that the debut of the 7 year Italian BTP may be worth keeping an eye on.

Launched in October, sales have been by syndication so far, so it will be the first auction for the maturity. Details of size will be out tonight. But in advance of that, Barclays note a small technical positive on the timing. Read more

Please sir, I want some more: Italy edition

Presenting Italy, a central plank in the argument for a new vLTRO or at least an extension of what we already have:

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Italian bank funding more fragile that it looks

The Italian government has not collapsed in a flurry of post-bunga bunga recrimination, at least not yet.

With the ECB standing ready, the debt markets are calm, and investors in the banks are feeling good about improvements in asset quality and the direction of earnings. Read more

Club Med yields, in historical context

Nothing like taking the long view – such as this snapshot of Spanish, Portuguese and Italian 10 year paper, over 150 years. Click to enlarge

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Crisis, what crisis etc

Bond yields in the eurozone are hitting new lows not seen since 2010…

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Was that promise of ratable payment wrong? Should Italy not have done that?

File under: Argentina’s battle with its holdouts and the effects thereof on pari passu clauses in sovereign bond contracts elsewhere in the world — with a special crossover to the changing legal status of official lenders in the eurozone crisis.

Spot the difference edition. Read more

When stress and spreads part company

William Porter at Credit Suisse has been mulling the market’s muted reaction to the Italian elections. Increased stress is no longer finding its way into widening spreads, thanks to the Draghi “put”.

This credit strategist is concerned. A dampened signaling mechanism increases the risk of something going badly wrong — a market crash, even. Read more

La brutta figura

Italy has finally fallen out of the ‘A’ ratings and into the Bs, at Fitch Ratings.

Here’s the explanation for cutting it to BBB+, outlook negative: Read more

Beppe Grillo at market’s close

Some thoughts from Beppe Grillo (really):

I’m here on the settee at home. They’ve made me lie down. They don’t want me to have any upsets. They’ve covered me up with one of those checkered rugs. Outside there are the floodlights beaming in through the bathroom window. I don’t know what they want to see. This adventure that we’re having is fantastic…

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The burning of Rome spreads

The political picture in Italy is looking deeply uncertain. We all know that.

But what’s possibly more interesting is the scale of the market reaction to that uncertainty. Read more

Italian post-election misery

In terms of providing certainty, it’s hard to see how the Italian election outcome could have been worse.

From the FTRead more

Stable Italy shocker hopes dashed!

No sooner had Italian stocks soared and bonds tightened (sic) on early exit polls suggesting Pier Luigi Bersani’s centre-left Democratic party might have secured victory in both the lower and upper houses of the Parlamento Italiano, than…

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Monte: oops

World’s oldest bank puts out a late-night statement confirming “the presence of errors” in three structured transactions. Click for the full release… (it’s in Italian)

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Pricing the Berlusconi bias

On a generally crappy day for equities and bonds across all the big western markets, Italian stocks stood out:

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Tom, Dick and Harry in Rome

A riddle, wrapped in a mystery, inside an enigma, inside a pari passu clause.

Here are some terms from Italy’s 2015 US dollar bond, which it issued under New York law in 2010. It is a pari passu clause, even though you won’t find the words ‘pari passu’. Read more

Arrivederci, Monti

Mario Monti, the saviour of Club Med, is walking and Italian bond yields are waving him off. Here are the 10-year and 30-year BTPs, with dramatic spikes:

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This eurozone PMI record appears to be broken

Another day, and another confirmation that the eurozone economy is struggling to gain traction. And it’s not just the small peripheral economies that are seeing factory activity slowing.

From Reuters:

Markit’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) fell to 45.4 in October from September’s 46.1. The October figure was just up from an earlier reported flash reading of 45.3. The index has been below the 50 mark that divides growth from contraction since August 2011.

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Foreign buyers and the OMT


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Spanish bonds are feeling positively Moody

That’s Spain’s 10yr spread over German Bunds dropping below 400 points for the first time since the start of April:

Spanish 10yr fell to 5.547 with Bunds touching 1.5864.

Probably something to do with Moody’s qualified endorsementRead more

And from confusion sprang ugliness… it was ever thus

That’s the FTSE 100 down 1.2 per cent:

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Volatility and the OMT

How much longer does this go on?

Spanish 2-year bond yields at 2.9 per cent – down from 6.6 per cent when we first said there was something to what Draghi was saying about convertibility risk. The Italian 2-year’s at 2.3 per cent. Longer-maturity debt has also rallied, despite falling outside the remit of the European Central Bank’s OMT purchases. Read more

Seniority, the SMP, and the OMT

“Was today the day that the Portuguese PSI began?,” Macro Man asks, of the OMT.

They’re noting something curious about ECB seniority in light of Thursday’s revelations about the OMT. The ‘technical features’ confirm that the OMT will receive equal treatment with ordinary bondholders if a eurozone sovereign restructures its debt. But, in the Q&A, Draghi also confirmed that the old SMP bond holdings will remain senior. It will be first in the queue, ahead of bondholders and the OMT. Read more

Eurozone PMIs: from still bad to worse

Let’s start on a positive note on the volley of Markit PMI released Monday.

Spain’s PMI rose during August to 44, versus 42.3 in July… Read more