Italy tries more state medicine to heal Alitalia 12 Oct 2018 The radical government wants the finance ministry and local railways to support a 2 bln euro rescue for the ailing airline. State involvement may scare off potential international partners and make it harder to cut costs. Taxpayers would once again bear the costs of failure.
Bank woes put Italy’s radicals on the spot 11 Oct 2018 Worsening investor sentiment caused by the new government’s fiscal binge is hurting the country’s banks. The weakest ones, like Carige, need capital, but may struggle to raise it. Either rescuing a bank or shutting it down would be politically toxic.
Italy botches useful fiscal boost 5 Oct 2018 The radical government wants to ramp up spending in defiance of Europe’s fiscal rules. The country could use a stimulus but the case is being undermined by rosy growth forecasts and inflammatory rhetoric from Rome. That spells more tensions with Brussels and bond markets.
Italy’s 5G auction is an $8 billion smash-and-grab 3 Oct 2018 The cash-strapped country raised more money than expected thanks to the canny way it sold mobile spectrum. The consequences are for others. If operators raise prices, it’s effectively a stealth tax. If they can’t, there will be less cash to build new networks in Europe.
Fiat car-parts sale needs private equity mechanics 3 Oct 2018 The carmaker may spin off or sell its Magneti Marelli unit. Handing it to shareholders would let them keep any upside. But the outlook for parts makers is mixed, and valuations low. Selling to the likes of KKR makes more sense, even if CEO Mike Manley has to accept a price cut.
Italy budget gives with one hand, takes with other 1 Oct 2018 The new government has chosen to fight stuttering growth with tax cuts and a “citizens’ income”. Ditching austerity may boost sentiment and lift consumer spending in the short term. But the plan lacks a credible strategy to fight youth unemployment which is over 30 pct.
Italy throws down debt gauntlet to EU and markets 27 Sep 2018 Rome is casting aside fiscal restraint by setting a deficit target of 2.4 pct of GDP through 2021. Such laxity risks swelling the euro area’s second-worst national debt. Political realities may restrain the EU Commission from holding the line. But investors may not be so kind.
Bolloré’s exit leaves Mediobanca exposed 27 Sep 2018 The French financier is ditching a shareholder pact that has long pulled the strings at Italy’s most influential investment bank. CEO Alberto Nagel, who has turned the bank around, gets a freer hand. But if the pact is not renewed, Mediobanca could more easily become a target.
Versace gives Blackstone a suitably flash exit 24 Sep 2018 Fashion group Michael Kors may pay 2 billion euros for the Italian label. The deal adds a high-profile name to CEO John Idol’s growing stable of luxury brands, but may take years to pay off. Minority investor Blackstone has stitched together a clean sale, and respectable return.
Mega-vendetta can’t square Italy’s budget circle 24 Sep 2018 A government spokesman has threatened a purge at the Treasury unless it finds the cash to pay for costly welfare handouts. Blaming the deep state won’t help. Global investors will stomach a bigger deficit only if Italy’s debt remains stable. Voters are in for a disappointment.
Starbucks’ Italy push may help it more at home 19 Sep 2018 The $74 bln coffee giant unveiled a massive espresso emporium in the centre of Milan. It sounds like the equivalent of carrying coals to Newcastle. But there may be some logic here if the buzz created around the Italian launch gives a jolt to flagging sales in America and beyond.
New Ferrari boss needs to prove green credentials 18 Sep 2018 Louis Camilleri fixed an initial blunder by reaffirming the targets of predecessor Sergio Marchionne. He also wants to sell more eco-friendly cars. Yet the goals look ambitious, and Ferrari is in the slow lane on hybrids. A late move into sports utility vehicles doesn’t help.
Regulator’s exit throws Italy fresh market test 14 Sep 2018 The head of the country’s financial watchdog resigned after ruling parties criticised his continuing ties with the European Commission. Mario Nava was appointed by the previous government. His replacement will face a challenge to dispel doubts of political meddling.
Ilva deal gives Italian business much-needed hope 7 Sep 2018 Rome has dropped its opposition to ArcelorMittal’s 4 bln euro swoop on Europe’s biggest steelworks. Scrapping Ilva would have been a victory for ideology over business logic and common sense. It’s an encouraging sign that the radical new government’s bark is less than its bite.
Vivendi gives Elliott a taste of activist medicine 6 Sep 2018 Telecom Italia is turning into the U.S. fund’s worst big investment in Europe. Vivendi, which used to run the telco and is its biggest investor, blames Elliott’s boardroom overhaul for the share price slump. Such squabbles distract from the problem of competition from new rivals.
Guest view: Italy’s autumn of discontent 4 Sep 2018 Market tensions are rising as the government prepares for negotiations with the European Union over the country’s budget for 2019. However, both Italy and the euro zone are better placed than before to cope with turmoil, writes Fabrizio Pagani of Muzinich & Co.
Foreign exodus to test Italy’s bond market buffers 31 Aug 2018 Fear of bold public spending is spooking foreign investors, making it harder for the government to fund itself. Italy can lean on banks and local savings to plug the gap. But gorging on debt hurts lenders and growth. And “Quitaly” concerns may lead Italians to move cash abroad.
Italy’s Trump card shows bond market fragility 24 Aug 2018 The U.S. President offered to buy Italian debt, according to one newspaper. Donald Trump may want to help a eurosceptic government but has limited scope to mitigate the damage that Rome’s policies are inflicting on domestic asset prices. Help is better sought closer to home.
Italy’s bond fix idea resembles covert bailout 21 Aug 2018 The economic spokesman of the ruling League Party says the euro will collapse unless the European Central Bank limits the gap between euro zone countries’ bond yields to 150 basis points. That bar is too low and would give big spenders free rein to dodge hard budget decisions.
Italy’s Atlantia hardball comes at a price 20 Aug 2018 The government may strip the group of a contract to manage Italy’s motorways after the Genoa disaster. Tough action is needed, but the move could cripple Atlantia and looks premature. The stock plunge is a reminder of why investors need to apply a bigger discount to local assets.