January 8, 2019 / 4:39 PM / 4 months ago

UPDATE 1-Italy readying new 15-year bond via syndicate - sources

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By Elvira Pollina and Luca Trogni

MILAN, Jan 8 (Reuters) - Italy is preparing a comeback to the syndicated bond market with the launch a new 15-year government bond in the coming days, two sources close to the matter told Reuters on Tuesday.

Italy last completed a syndicated deal in January last year when it sold a 20-year nominal bond before a populist government came to power, sapping appetite for Italian bonds.

Rome agreed in late December to re-draft its budget for this year and cut its deficit target to 2.04 percent of gross domestic product after a long row with the European Commission, ending months of market turbulence and bringing down yields on Italian debt.

“Since the budget was revised there has been appetite for BTPs and that should continue,” said Pooja Kumra, European rates strategist at TD Securities in London, adding that she thought the Italian bond sale would take place next week.

“In terms of what is being announced by European sovereigns this week, it is in line with expectations and reflects the better sentiment towards bond markets”.

One of the sources said the Rome-based Treasury could announce a mandate to banks for the bond sale as early as Tuesday afternoon, or alternatively next Monday after holding its regular mid-month auctions in the second half of this week.

Ireland and Portugal mandated banks for 10-year syndicated deals on Tuesday, while Belgium sold a 6 billion euro ($6.9 billion) 10-year bond.

Italy’s Treasury was not immediately available for comment.

Italian government bond yields extended their rise after the news of the potential syndicated bond deal. Ten-year Italian bond yields rose to 2.714 percent, their highest level in three weeks.

In a syndicate deal the borrower appoints banks to sell debt directly to international investors, instead of just running bond auctions at home. Such deals offer access to a far wider, deep-pocketed investor pool and allow borrowers to raise more money in one hit, often with longer tenors.

In a sign of improved market appetite for Italian paper, the country’s main bank UniCredit was on the U.S. market on Tuesday with a two-tranche senior non-preferred deal, raising orders for over $3.6 billion. ($1 = 0.8740 euros) (Additional reporting by Dhara Ranasinghe; writing by Giulio Piovaccari; editing by John Stonestreet and Hugh Lawson)

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