May 18, 2020 / 10:50 AM / 11 days ago

Intesa issues first Italian bank bond since COVID-19 crisis

MILAN, May 18 (Reuters) - Intesa Sanpaolo sought to restart the bond market for the country’s lenders following a hiatus caused by the coronavirus, as Italian shops and cafes reopened on Monday after a 10-week lockdown.

The five-year senior unsecured bond being offered by Italy’s biggest retail bank is the first debt issue by an Italian lender since the COVID-19 outbreak in the country in late February.

Before that Italian banks had enjoyed strong market momentum, which allowed even second-tier lenders to place risky debt at competitive rates.

The virus has killed almost 32,000 people in Italy and is expected to cause a recession which could shrink the economy by as much as 13% this year, according to a Bank of Italy study.

Fitch Ratings last week cut Intesa’s senior unsecured long-term rating by one notch to ‘BBB-‘ following a similar move on Italy’s sovereign rating prompted by the coronavirus emergency.

By mid-morning, Intesa’s issue had drawn more than 1.25 billion euros ($1.35 billion) in orders, according to a person familiar with the matter.

The person also said the initial guidance on the bond’s yield was for a premium of around 270 basis points on the mid-swap rate.

Banca IMI, BofA Securities, Citi, Credit Agricole CIB, Deutsche Bank, Natixis and UBS are joint bookrunners for the issue. ($1 = 0.9257 euros) (Reporting by Valentina Za; editing by Emelia Sithole-Matarise)

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