Italy

The Italian Treasury has bought back nearly €1bn of short-dated government debt in a previously unannounced operation that appeared to be a bid to provide investors with liquidity in the teeth of a sharp market sell-off, the Financial Times reported. The move is the third time the government has bought back its debt since Italian bonds were first hit by negative investor sentiment in late May. That sell-off was triggered by the formation of a populist Eurosceptic coalition government.

Bonds sold by Italy’s companies are outperforming the country’s sovereign debt, in an unusual situation that suggests investors have more confidence in its corporations than in its government. The Markit iBoxx Total Return index of Italian corporate debt is down 2 per cent so far this year, but the equivalent benchmark for sovereign bonds has fallen 3.3 per cent, the Financial Times reported. Italian energy and consumer goods groups are performing particularly well, as many have significant international revenues that help offset any weakness in domestic performance.

Italian utility Enel SpA has called a halt to further acquisitions in Brazil for the time being as it gears up to complete asset sales of up to 1.5 billion euros (1.34 billion pounds) in the second half of the year, the International New York Times reported on a Reuters story. "I don't see appetite for further acquisitions in Brazil at this stage," Enel CEO Francesco Starace told analysts on a conference call on Tuesday after the company released first-half results.

Deloitte LLP is offering Italy’s builders a way to get billions of euros in unpaid bills from public works projects off their balance sheets -- selling them at a discount to hedge funds. Construction companies that say they incurred costs in excess of agreed terms of public infrastructure projects have to pursue the difference in what can be a lengthy legal process, Bloomberg News reported.

Foreign investors shed record volumes of Italian debt in May as a sharp sell-off hit the country’s bond market, according to data highlighting the challenges facing the new populist government in the coming months. Italy’s governing coalition is set to bring forward a contentious budget this autumn, which some investors fear could threaten the country’s fiscal outlook, the Financial Times reported. Earlier this month the new government said it would not take any further measures to cut its deficit this year and warned of a possible downgrade to growth forecasts.

Italy’s interior minister Matteo Salvini has vowed to reform the European Union by giving member states more control over their economic policies, The Daily Express reported. In a stinging attack on Brussels, Mr Salvini claimed the Eurozone was responsible for soaring levels of public debt in Italy. And he said it was time for EU member states to be take back their "freedom" from unelected bureaucrats. Mr Salvini, the head of Italy's right-wing Lega party, said: "The word 'populism' is a compliment to me.

Italy's recent bond shock showed that the financial derivatives market designed to insure against sovereign defaults hasn't been killed off by doubts about whether those contracts would pay out when the time came, the International New York Times reported on a Reuters story. The market for sovereign credit default swaps (CDS) is half the size it was six years ago at the height of the euro zone debt crisis, following a government clampdown and a patchy record as a hedge for a credit event.

Italy's anti-establishment coalition government is likely to delay a planned reform of the country's mutual banks through a decree it will approve next week, two sources familiar with the matter said on Tuesday. The right-wing League party has been pushing for a moratorium of the reform, which was introduced by the former centre-left government and is forcing hundreds of small mutual banks (BCCs) to merge to create larger groups, the International New York Times reported on a Reuters story.

Cerberus Capital Management LP made a joint offer with Banca Ifis SpA to buy most of the 6 billion euros ($7 billion) of Italian bad loans being sold by Credit Agricole SA, according to people with knowledge of the matter. The pair submitted a bid for a package nominally valued at 4.3 billion euros, said the people, who asked not to be identified as the transaction isn’t public, Bloomberg News reported.

A widely watched measure of eurozone capital flows suggests that Italy’s debts to the European Central Bank are set to hit €500bn this summer, reflecting the eurozone’s persistent financial imbalances, the Financial Times reported. The country’s Target 2 balance — the difference between incoming and outgoing cross-border payments — is €480bn in the red and growing rapidly, according to ECB data. Meanwhile, Germany’s Target 2 surplus is on track to reach €1tn.