MILAN, March 11 The positive trend in Italian
corporate bond issuance is set to continue as banks remain
selective about who they lend to, Moody's said on Monday.
Refinancing and investment needs, together with continuing
stress in the banking system, will fuel further bond market
growth, the credit rating agency said in a report.
Italian corporate bond issuance set a record in 2012, with a
total of 29.8 billion euros ($38.8 billion)worth of bonds
Moody's said in the report it expected large, publicly rated
and well-known issuers to continue to enjoy good access to
capital markets going forward.
But it warned that smaller companies or family-owned
businesses might experience difficulties in accessing the bond
market for the first time.
Two sources told Reuters on Monday the Bank of Italy has
told some of Italy's biggest banks to hike bad-loan provisions
after a sector audit showed they were vulnerable to defaults
from small firms struggling in a deep recession.
Bad loans at Italian banks have risen sharply in recent
months as the economic slowdown takes its toll on businesses and
In January they rose by 17.5 percent from a year earlier,
compared to 16.6 percent rise for December.
"We also expect continued investor appetite for corporate
bonds compared to financial institution ones, which are
perceived as more directly correlated with sovereign risk," the
author of the Moody's report Paolo Leschiutta said.
Moody's warned political and macroeconomic uncertainties
could constrain growth in Italian corporate bond issuance.
Elections in February left Italy in a state of limbo by
producing a hung parliament, with a centre-left coalition
winning the lower house but falling short of control of the
Last Friday Fitch cut Italy's credit rating due to the
political uncertainty after last week's election, deep recession
and rising debt.
($1 = 0.7684 euros)
(Reporting By Stephen Jewkes; Editing by Michael Roddy)