Euroland Municipal Bonds: New city states
Investors in Italian local authorities look to regions rather than cities to provide real liquidity. Marcello Esposito, an analyst of the sector at BCI in Milan, sees €250 million as the desirable minimum bond size..
Apart from the two or three biggest cities, he thinks only the regions can do €250 million. In June 1998, the central Italian region of Lazio, which includes Rome, obliged. Its €250 million floater, launched under a global MTN programme, was twice oversubscribed and came at a spread of 31 basis points over the French government yield curve. The euro deal, arranged by Warburg Dillon Read, was the first local authority bond in the new currency. Since then, Ile de France, Catalonia and the Valencia region have also issued bonds of about €200 million to €300 million.
Earlier last year, Lazio raised $200 million and $100 million from the same global shelf, this time with the help of Merrill Lynch. Both bonds were long-dated: the former 20 years with an amortizing structure, the latter 30.