Italy

UniCredit SpA is selling at least 3 billion euros ($3.5 billion) of non-performing loans in different deals, while extending a partnership to manage troubled corporate debt as part of its cleanup strategy, according to people with knowledge of the matter, Bloomberg News reported. The Italian bank is reviewing final offers for 700 million euros of unsecured loans in a disposal project dubbed Narciso and plans to finalize the sale next month, said the people, who asked not to be identified because the matter is private.

Bain Capital Credit, part of global investment firm Bain Capital, has won a race to buy a soured debt portfolio from the Italian arm of French bank Credit Agricole, a person familiar with the matter said, the International New York Times reported. The source said the portfolio, with a gross book value of 450 million euros ($521 million), comprises so-called 'unlikely-to-pay' (UTP) loans backed by real estate assets. UTP loans are not yet in default but they are unlikely to be repaid in full.

Giuseppe Conte, Italy’s prime minister, slammed key features of a eurozone reform plan hatched last week by France and Germany, staking out a hardline position on economic policy as well as immigration ahead of his first EU summit as head of the populist government in Rome, the Financial Times reported. In a speech to parliament on Wednesday morning, Mr Conte said it was the “moment to advance risk sharing, which has been left too far behind”.

Italian government bond prices and stocks fell sharply in value on Thursday after two staunchly Eurosceptic lawmakers from the far-right League were tapped to lead key Italian parliamentary committees that deal with economic policy, the Financial Times reported. The yield on two-year government bonds rose as much as 33 basis points to 0.912 per cent while the 10-year was up 16bp to 2.721 per cent as debt prices fell.

The Italian economy has significant problems — notably feeble productivity growth and a competitiveness handicap, particularly vis a vis Germany. These, writes Martin Wolf in his latest column, are domestic shortcomings, the Financial Times reported in a commentary. However, Martin argues that Italy’s membership of the eurozone makes them common concerns. What can be done? In the absence of sustained fiscal transfers between member states of the eurozone, the burden of adjustment will fall on Italy itself.

Italy poses a big risk to the stability of Europe, despite the recent ceasefire between the new coalition government and the markets — and Brexit will not protect Britain from the fallout, some of Britain’s top financiers have warned. Norman Blackwell, chairman of Lloyds and one of the few senior pro-Brexit figures in the City, suggested Italy’s political turmoil could easily recur because of the challenges of maintaining the fiscal discipline necessary for a European single currency, the Financial Times reported.

The gyrations in the Italian government bond market have revealed how Europe’s liquidity-starved sovereign debt markets are being heavily tested by even short bouts of political instability, the Financial Times reported. The rapid rise and fall in yields in the eurozone’s largest debt market in recent weeks has been exacerbated by thin sovereign debt liquidity.

Italian bonds slid as the country’s new government continued to unnerve investors and European Central Bank policy makers flagged the prospect of talks to end its debt-buying program, Bloomberg News reported. The declines were led by two-year bonds, which have swung wildly over the past week. Italy’s new Prime Minister Giuseppe Conte passed a confidence vote in the Senate Tuesday following his maiden speech that stuck to a spending platform outlined by the Five Star Movement-League coalition.

Italy’s crisis gives the European Central Bank tough choices as it tries to tread a line between containing market turmoil and sticking to plans to end its crisis-era monetary support, the Financial Times reported. The dilemma is made even more acute by the nationality of the ECB’s president. Mario Draghi, head of the Bank of Italy before his ECB appointment, knows better than anyone his country’s importance to his current mandate to ensure eurozone stability.

The latest jolt to European political stability may be an opportune time to snap up Italian banking shares, many of which have just resurfaced from years of being in the doldrums, Bloomberg News reported. “It’s definitely a close-your-eyes and hold-your-nose purchase,” said Ben Kumar, a London-based money manager at Seven Investment Management, which manages about $16 billion.