More Italian companies are set to tap the debt market for the first time this year, hoping to attract yield-hungry investors and find alternative sources of funds as bank lending dries up.
Today the market is wide open for everyone
Out of the 25 bonds sold by Italian companies this year, eight were from first-time issuers, lured by lower borrowing costs and tax incentives for smaller Italian businesses that turn to capital markets to finance themselves. Last year, only two new names hit the Italian debt market out of a total of 37 bonds.
Italy’s corporate debt market has long been the preserve of big firms, with smaller ones relying on the banks for funding. But that is changing as banks slash their loan books and a more upbeat mood in financial markets makes it easier for medium-sized companies to sell bonds at affordable rates, bankers said.
“Today the market is wide open for everyone,” said Francesco Rossi Ferrini, senior country officer for Italy at JP Morgan.
Bankers expect at least four or five bond issues by Italian companies by the summer, including a hybrid bond for €1.5-€2 billion by Enel, Italy’s biggest utility.
Three of those could be newcomers, said Gabriele Vianello, head of primary markets in Italy for BNP Paribas-BNL Corporate Investment Banking, whose team oversaw the market debut of business credit data company Cerved and vending machine firm IVS Group this year.
“While last year Italy’s capital market was made by large deals from frequent issuers, this year will probably be marked by more small-sized deals,” Vianello said.
He predicts Italian companies will issue €50 billion of debt this year, up from €46 billion in 2012, with non-financial businesses accounting for roughly €20 billion.
The Italian state railways Ferrovie dello Stato said on Friday it had mandated Deutsche Bank, Credit Agricole, UniCredit and JP Morgan to arrange a debut medium-term note programme worth up to €4.5 billion. A first issue of the programme is expected by the end of July, Ferrovie said.
Italy’s main postal operator Poste Italiane could be another newcomer on Italy’s debt market in the near future. It has mandated Banca IMI and Deutsche Bank to sound out investors at the beginning of June on the possible launch of an inaugural bond, said a source close to the matter.
IVS Group launched its first bond, for €200 million, last March, with a 7.1 per cent coupon and maturing in 2020.
Bankers said fears of domestic political uncertainty had subsided after the formation of a government in April following two months of political stalemate.