UPDATE 1-Italy sets European record with four-year linker bond

Thu Oct 18, 2012 1:09pm EDT

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By John Geddie

LONDON, Oct 18 (IFR) - The Republic of Italy has set a record for the largest amount raised in a single debt offering in European markets on Thursday, selling EUR18.02bn for its third four-year inflation-linked bond this year.

The Baa2/BBB+/A- rated eurozone sovereign is behind only the global record held by the U.S. Treasury, which in August tapped outstanding three, 10 and 30-year bonds, to the tune of USD32bn, USD24bn and USD16bn respectively, according to IFR Thomson Reuters data.

Order books on Italy's linker built rapidly during Thursday trade and the entire amount requested was allocated, said one bank managing the deal.

The bond was sold over four days starting on Monday.

Italy - which used to be one of the biggest issuers of syndicate bonds - has conducted only one syndicated bond sale in the past two years.

It has instead found more fortune with bonds targeted to retail investors like the linker.

The Tesoro sold EUR7.3bn of four-year linkers in March, but the second issue was disappointing, with only EUR1.7bn placed in June.

Both domestic and international accounts participated in the latest deal. One lead bank said that, of the EUR11bn orders recorded on Wednesday evening, approximately 70% were from retail and private investors, and the remaining 30% from institutional accounts.

The new bond priced at par to pay a coupon of 2.55%.

Monte dei Paschi Capital Services and UniCredit are lead managing the deal.

(Reporting By John Geddie; Editing by Alex Chambers and Marc Carnegie)

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