Italy

Prescient or foolhardy? Investors who took a punt on Italian government bonds late last year are already sitting on handsome profits, leaving those who missed out asking whether Italy under Mario Monti’s technocratic government has truly turned a corner. Analysts are warning, however, that the strong market rally – primarily driven by cheap financing provided by the European Central Bank – flies in the face of expectations that Italy, the most critical element for the survival of the euro, will suffer the deepest recession among advanced economies this year.

All is not lost for small, struggling companies around Milan. The local chamber of commerce’s “Fondo Sbloccacrediti Milano” – literally, “Milan’s fund to Free up Credit” – is a sign of the gloomy times across parts of Italy’s business community, the Financial Times reported. Set up by UniCredit, the country’s largest bank, and the local business lobby, the credit line offers a last ditch chance for small viable businesses with nowhere else to turn. With just €15m available, however, the fund may quickly prove inadequate.

Italian yellow pages group Seat Pagine Gialle urged creditors to agree a restructuring of its 2.7 billion euros ($3.44 billion) of debt, warning it would otherwise go into special administration, Reuters reported. Turin-based Seat said on Tuesday its board would meet shortly, likely by the end of January, to approve a final debt restructuring proposal and set a last deadline. Seat said that if its final proposal is not accepted, it would make no more extensions and start special administration proceedings under Italy's so-called Marzano law.

Seat Pagine Gialle SpA (PG), Italy’s largest phone-book publisher, may extend a proposal to restructure its debt to senior bondholders, two people familiar with the matter said, Bloomberg reported. The senior noteholders, who own about 750 million euros ($957 million) of Seat Pagine bonds, may be involved to broaden approval for the plan and avoid possible legal challenges from them, the people said, who asked not to be identified because the deliberations are private.

Angela Merkel has given effusive praise for the economic reforms introduced by Italy’s new government of technocrats, marking a clear seal of approval from the German government – in stark contrast to its long-standing doubts about the previous Italian administration, the Financial Times reported. Speaking after her first bilateral summit with Mario Monti, who succeeded Silvio Berlusconi as Italian prime minister in November, the German chancellor lauded the “extraordinarily important and remarkable measures” already taken by his technocratic administration.

The Italian government will not have to carry out an additional package of budget cutting measures to meet its goal of eliminating its deficit in 2013, Prime Minister Mario Monti said, Bloomberg reported. His government will now focus on producing a package of measures to spur economic growth and competitiveness in Italy to be presented before a meeting of European Union finance chiefs on Jan. 23, Monti said on the “Che Tempo Che Fa” talk show on state-owned RAI television.

Prime Minister Mario Monti yesterday presented in broad terms his government's master plan for Italy, which he called "Grow Italy," the New York Times reported today. Devised to spur growth in a country that has seen little of it in the past 15 years, the proposals would include liberalizing Italy's closed professions and guilds, encouraging competitiveness and modernizing the nation's outdated infrastructure. The government will also tackle labor reform, a thorny issue for labor unions as well as for some political parties that support Monti's government.

Financial market pressure on Italy eased temporarily on Wednesday, with borrowing rates on some government-issued debt dropping by half. But the political pressure on the government of Prime Minister Mario Monti remained high — and was rising, the New York Times reported Wednesday. Last week, Mr. Monti won final approval of a $40 billion spending package that includes tax increases and a pension change aimed at eliminating Italy's budget deficit by 2013.

Italy's Senate voted overwhelmingly to give final approval yesterday to a $40 billion austerity and growth package aimed at eliminating Italy’s budget deficit by 2013 and stimulating the economy as part of a broader plan to stabilize the euro, the New York Times reported today.

The foundation that owns 49 percent of Italy's Banca Monte dei Paschi di Siena said on Monday it had reached two debt standstill agreements with its own lenders as it tries to keep control of Italy's third-largest bank, Reuters reported. The foundation is expected to sell assets as part of a debt restructuring deal, with the sale of a stake of 10-15 percent in Monte Paschi seen as one possibility.