Italy

Italy’s government will extend to the end of June the deadline for Alitalia to repay a 900 million euro ($1 billion) bridge loan, Italy’s Deputy Prime Minister Luigi Di Maio said on Friday. The current deadline is Dec. 15, but Di Maio said the government would change the date in a decree to be approved on Monday, Reuters reported. The loan was given to the airline, which is under special administration and is being run by state commissioners, to keep it afloat until it can restructure and find partners.

Italy has bought back €3.2bn of its short-dated debt in a move that was financed by tapping an existing three-year bond, the Financial Times reported. The Italian Treasury said in a statement that the rationale for the move was “to improve the liquidity and the efficiency of the secondary market for government securities”. The €3.2bn of new three-year debt was sold via syndication on Thursday by re-opening the October 2021 bond, which carries a 2.3 per cent coupon. It is Italy’s first syndicated deal since January, and its last debt sale of this year.

Italy’s populist government is at loggerheads over how to temper its proposed spending spree, as Prime Minister Giuseppe Conte seeks to forge a new budget plan to submit to European Commission head Jean-Claude Juncker next week, Bloomberg News reported. Conte will meet Juncker in Strasbourg, France, on Tuesday in the latest attempt to avert possible fines on Italy, according to his office.

Italian builder Astaldi is talking to Fortress and other alternative lenders to secure 70 million euros ($80 million) of immediate bridge funding in a race to stay afloat, three sources said on Thursday. Italy’s biggest infrastructure builder by sales filed for court protection from creditors in September after being hit by delays to plans to sell a bridge in Turkey, Reuters reported. “The 70 million euros is the first tranche of an overall bridge package of some 200 million euros and will cover finance needs to the end of next February,” one of the sources said.

Italy’s prime minister has signalled he would be willing to modify his government’s budget plan in response to criticism from Brussels but only if the expensive welfare policies it contains remain intact, the Financial Times reported. Giuseppe Conte said minor amendments could be made to Rome’s populist coalition government’s budget to avoid Italy being sanctioned by the European Commission. “Right now if I am able to recover some funds, tweak the final figure, change a few things it doesn’t mean that I am backtracking,” Mr Conte said in an interview with La Repubblica newspaper.

Italian government bond yields have fallen to their lowest level since the end of September, in the wake of media reports that Rome was seeking a compromise with Brussels over its controversial deficit-boosting budget, the Financial Times reported. The yield on 10-year Italian government debt fell 10 basis points from Friday’s close to 3.11 per cent, taking its spread over the equivalent German Bund to 280 bps, its narrowest since early October. Italian finance minister Giovanni Tria met European Commission vice-president Valdis Dombrovskis in Brussels on Monday.

Euro-area finance ministers gather in Brussels on Monday for their final meeting on buttressing the currency bloc before passing the baton to their leaders, who are expected to strike a deal later this month, Bloomberg News reported. “I don’t think the European countries are living through a period of particularly excellent economic welfare otherwise we wouldn’t have had Brexit,” Italian Deputy Premier Matteo Salvini said during a Politico conference in Brussels. “The basics of the budget won’t change: the pension overhaul, the reforms of the work conditions,” Salvini said.

Europe’s only commercial maker of military drones, Italy-based Piaggio Aerospace, has lost its sole customer after going into bankruptcy in a setback for Italian ambitions to challenge U.S. and Israeli firms in a fast growing industry, Reuters reported. Piaggio, a unit of Abu Dhabi’s sovereign fund Mubadala, competes with firms such as U.S. General Atomic, Northrop Grumman and Lockheed Martin as well as Israel’s Elbit Systems and Israeli Aerospace Industries (IAI).

Italian banks have increased their holdings of government debt by the largest amount since the early days of the country’s bond market sell-off nearly six months ago, in the latest sign that the eurozone ‘doom loop’ is still going strong, the Financial Times reported. Financial institutions in Italy bought a net €6.9bn of Italian government bonds in October, according to newly-released data from the European Central Bank. That takes their total net increase in sovereign bond-holdings since the market first tanked in May to €54bn.

German economist Clemens Fuest described Italy as the “bigger problem, particularly in the medium term” as he claimed the impact of Brexit would be only a “short-term issue,” Daily Express reported. Italy has sent the eurozone into meltdown and the euro currency floundering after announcing its spending plans which include a deficit target of 2.4 percent for 2019. The budgetary measures enraged European Commission (EC) chiefs, who sensationally rejected the fiscal plans after claiming they breached previous spending agreements.