August 9, 2019 / 10:43 AM / a month ago

Political crisis eases regulatory risk for Italy's Atlantia

MILAN (Reuters) - Shares in Italian infrastructure group Atlantia (ATL.MI) rose more than 2% on Friday as a possible breakdown in the government was seen as lessening the prospect it could lose its lucrative motorway concession.

FILE PHOTO: Controlled explosions demolish two of the pylons of the Morandi bridge almost a year since a section of the viaduct collapsed killing 43 people, in Genoa, Italy June 28, 2019. REUTERS/Massimo Pinca/File Photo

The stock bucked a sinking trend on Milan’s main equity index, accompanied by rising sovereign bond yields, the morning after Deputy Prime Minister Matteo Salvini called for an early election.

Atlantia’s concession to operate around 3,000 km of motorways, about half the Italian network, has been under threat from Salvini’s coalition partner 5-Star since a bridge it operated in Italy collapsed last year, killing 43 people.

Salvini, leader of the far-right League, pulled the plug on the government on Thursday, diluting that threat to a business unit which brings in a third of Atlantia’s core profit.

“Atlantia is rising because the 5-Star have always supported revoking the concession, and the government crisis blows this away,” a Milan-based trader said.

According to financial analyst Marco Opipari at broker Fidentiis, the stock was boosted by prospects that the 5-Star would not be part of a new government.

“If the government resigns, the procedure for revoking the concession would be interrupted, and since it would be unlikely that 5-Star would participate in a new executive, it would be very plausible that this procedure would not be reopened,” Opipari said.

The infrastructure group and its top managers are under investigation for the bridge collapse, together with several officials of Italy’s transport ministry.

Atlantia has always denied any wrongdoing, saying regular, state-supervised inspections had indicated the viaduct was safe.

“The risks linked to the outcome of the civil and criminal trial on the collapse of the Genoa bridge would remain, but there is no doubt that Atlantia’s position would be greatly favoured in its relations with a government without the 5-Star,” Opipari added

Atlantia declined comment.

FIRST ANNIVERSARY

During a fractious 14 months in government, 5-Star has accused the League of being too soft on Atlantia.

A ceremony is due to take place in Genoa on Aug. 14 to mark the first anniversary of the collapse of the Morandi bridge, a disaster that shocked the country and severed a key connection between the port city and southern France.

5-Star has more parliamentary seats than the League, but polls say its partner now enjoys twice as much voter support.

Atlantia, owned by the Benetton business dynasty, may also be less likely to invest in the rescue of struggling airline Alitalia, the trader added.

Pumping money into Alitalia, which successive Italian governments have tried and failed to return to profit, could have been seen by Atlantia as a means of improving its relationship with Rome, analysts said.

Atlantia has said it would be in its own interest to invest in Alitalia because it operates Rome’s main airport Fiumicino, which could suffer if the airline goes belly-up.

Italy's blue-chip index .FTMIB was down 2.3% by 0950 GMT, while Atlantia shares were up 2.2% at 23.98 euros, having risen more than 3% after the market open.

Additional reporting by Giancarlo Navach; Editing by David Holmes and Jan Harvey

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