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Italian Corporate Bonds Outlook 2023

Maria Grazia Antola, Head of Credit Research Intesa Sanpaolo
10.02.2023
fruition time: 5 min

INSIGHTS - ECONOMIND

Italian Corporate Bonds Outlook 2023

Italian Corporate Bonds Outlook 2023

02:34

Italian banks, under our coverage, are in a sound financial position at the beginning of 2023, with good asset quality, robust levels of capitalization and liquidity, and sustained profitability. We believe they are well equipped and positioned to face the worsening operating environment and the expected weakening of the economic scenario.

Most of the Italian companies which we cover are ready to withstand the rising macroeconomic pressures, based on their resilient credit metrics shown so far and adequate liquidity buffers, with low refinancing risk until 2025, on average, according to our estimates.

The ECB’s monetary policy will continue to be a key factor this year, in particular the ‘quantitative tightening’ set to start in March. A rebound in primary markets is estimated in terms of net issuance, for both banks and non-financial firms.

Within Italian bank bonds under our coverage, we maintain an overall constructive view, particularly on Investment Grade issuers, on subordinated and hybrid bonds. Within Italian corporate bonds, we believe that valuations are still generally attractive, with a preference for Investment Grade issuers over High Yield issuers and for defensive sectors over cyclical ones. Finally, we consider hybrid bond valuations attractive.

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