Banca Monte dei Paschi di Siena SpA is pitching its first bond sale in more than two years, taking advantage of improved investor sentiment after it posted better-than-expected earnings.
(Bloomberg) — Banca Monte dei Paschi di Siena SpA is pitching its first bond sale in more than two years, taking advantage of improved investor sentiment after it posted better-than-expected earnings.
The world’s oldest lender is set to price €750 million ($796 million) of new notes maturing in 2026, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it.
The bank last priced a public bond in December 2020.
The deal comes as the Siena-based lender also presses ahead with a cost-cutting plan funded with €2.5 billion of fresh capital raised in November.
As part of the turnaround plan, Chief Executive Officer Luigi Lovaglio is cutting more than 4,000 jobs.
Moody’s Investors Service also upgraded the bank’s ratings earlier this month, taking the view that it has made significant progress over the past few years toward improving the viability of its business.
A spokeswoman for Monte Paschi declined to comment on the bond sale when contacted by Bloomberg.
Also playing in the bank’s favor is the dismissal in January by an EU court of a five-year long legal action taken by holders of the bank’s old junior notes that were canceled as part of the recapitalization process for the lender.
Painful Turnaround
The lender, founded in 1472, has undergone years of painful efforts to turn it business around since it was first bailed out by the Italian government in 2009.
Since then, it has struggled to return to profitability given limited room for maneuver under terms the European Union set in exchange for approving the bank’s nationalization in 2017.
But the boost to revenues from higher interest rates and its cost-cutting drive helped the lender to book its fourth-quarter profit.
Here are more details of the bank’s bond sale and funding plans:
- Monte Paschi’s bond is set to price at 6.75% from initial marketing at 7% to 7.125% range
- Books are above €1.5 billion
- Back in Dec.
2020, it priced senior preferred notes maturing in 2026 to yield 1.963%
- Barclays Plc, Mediobanca SpA, MPS, NatWest Markets Plc, Banco Santander SA and Societe Generale SA are working on the bond
- Monte Paschi expects to raise more than €2 billion from wholesale funding markets, CFO Andrea Maffezzoni said during the bank’s earnings presentation
- The bank plans to mainly sell senior preferred securities, with a remaining component of senior non-preferred notes, he said
- Monte dei Paschi doesn’t plan to issue AT1s or Tier 2 notes this year
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