Poste Italiane returns to the market after 5 years of absence with the issue on 26 November of a new 750 million senior unsecured bond intended for institutional investors. The timing is not coincidental, given that it came following the improvement of Italy’s rating by Moody’s.
The objective of launching the new bond is to diversify sources of financing, create a solid financial structure that can stably support the group’s growth plans and involve more international investors.
The settlement date for the bonds should be December 3rd. On the same day the securities will be listed in Luxembourg and on the Mot.
Poste Italiane’s new bond
The new bond is placed within the 2.5 billion euro Emtn (Euro Medium Term Notes) program and is intended for a public of professional investors.
More precisely, it is a senior unsecured bond in euros which has a nominal amount equal to 750 million euros with a maturity set at 3 December 2030 and a duration of 5 years from the settlement date.
But what exactly is a senior unsecured bond?
This is a bond that, despite not being backed by collateral on specific assets such as real estate, enjoys the highest level of privilege in the issuer’s debt structure. It means that, in the event of liquidation, whoever owns it will be entitled to reimbursement before subordinated creditors.
The characteristics of the new Poste Italiane bond
Poste Italiane announced that the bond includes:
- a 3% annual coupon;
- an issue price equal to 99.794%;
- effective yield to maturity of 3.045%;
- Isin XS3244877869.
The placement of this product will be settled on 3 December 2025 concurrently with the start of listing on the two reference markets which are the Telematic Bond Market (Mot) of the Italian Stock Exchange and the regulated one of the Luxembourg Stock Exchange. Both platforms are traditionally used for corporate securities that have broad international demand.
Demand has exceeded supply three times, why?
In a note, Poste Italiane explained that the issue of the new bond was very favorably received. In fact, it recorded demand that exceeded the supply of available securities by more than three times.
Interest in the new bond was broad, with strong participation from international investors mainly from Austria, Germany, France and Benelux.
This also happened thanks to a mix of factors that attracted the attention of investors in the days preceding the placement. Certainly one of the main reasons is the improvement of the Italian rating by Moody’s which last November 24th raised it from Baa3 to Baa2.
It means that Italy is now considered a more reliable debtor even if there are still structural weaknesses such as high debt but the prospects have improved.
This promotion also had a direct impact on large companies such as Poste Italiane whose reliability rating improved. The new bond issue is in fact proof of this and has been considered a fairly safe investment.
The success is also due to the winning combination of:
- a short-medium term deadline;
- of a fixed rate that is more attractive than other government bonds;
- to the company’s solid reputation.
This issue, therefore, has become a tangible signal of the confidence of foreign investors not only in Poste Italiane but also in all Italian companies in a moment of macroeconomic stability.
Which credit institutions was the placement managed by
A consortium of leading international banks managed the 750 million euro issue in the role of Joint Bookrunner. The latter term indicates the set of credit institutions that have worked together to:
- manage the operation;
- create demand;
- set the final price;
- sell bonds;
- stabilize the market.
These include in alphabetical order:
- Barclays;
- BNP Paribas;
- BofA Securities;
- Citigroup;
- Crédit Agricole Cib;
- Deutsche Bank;
- Imi-Intesa Sanpaolo;
- Eng;
- Mediobanca;
- Morgan Stanley;
- Societe Generale;
- UniCredit.
Deutsche Bank Ag will then play the role of payment agent or will have the role of cashier and administrator of the operation.
The main reason why so many different banks from different countries were chosen is to sell the bonds to as many large investors as possible across Europe.
What is the objective of the new issue?
From the press release released by Poste Italiane it is clear that the new issue has two objectives. The first is to find new sources of financing in addition to the traditional ones while the second is to attract new types of investors.
Poste is a large group with a very strong presence in the area, so it is essential that it maintains a solid and flexible financial structure and this operation was carried out precisely to:
- support extensive activities;
- its continuous growth.
The funds that will then be raised through the issue will be allocated to the company’s operational needs such as:
- new investments;
- other strategic initiatives;
- daily activities.
The opinions of the main rating agencies
Poste Italiane’s new bond issue received positive reviews from the main rating agencies. It obtained a rating of BBB+ from Standard & Poor’s (S&P), Baa2 from Moody’s and BBB+ from Scope.
These are votes that count because:
- they are a mark of safety and quality;
- they determine the interest that Poste must pay and a high rating means low risk;
- they open the doors to more investors, many large investment funds such as insurance companies are in fact prohibited by statute from investing in bonds with too low a rating.
Why is the new bond an opportunity for investors?
Poste Italiane’s new bond is an interesting opportunity for investors. The reason is that compared to 5-year BTPs it offers a higher return but at the same time offers limited risk thanks to its investment grade rating.
The effective yield of 3.045% at maturity and the 3% coupon, in fact, are very competitive in a context in which rates are slowly normalizing.
Finally, after the bond is admitted to listing on the regulated market of the Luxembourg Stock Exchange and the Mot, it will be able to trade freely on the secondary markets.
