UPDATE 1-Italy borrowing costs fall but investors wary

* First long-term debt sale after Fitch, Moody’s downgradesBy Valentina ZaMILAN, Oct 13 (Reuters) - Italy’s five-year debt costs fell at auction on Thursday helped by a more optimistic outlook for the euro zone debt crisis but there were signs investors are still wary of Italian bonds after two ratings downgrades in less than a week.The country’s towering debt pile and ailing growth rates have made it a focus of the crisis and Moody’s and Fitch cut Italy’s credit-ratings last week following a similar move by Standard & Poor’s in September.Domestic politics has created further uncertainty with Prime Minister Silvio Berlusconi facing a confidence vote in his government on Friday.Italy sold 6.19 billion euros of debt at the auction, close to the top of its target range.Despite solid demand at the sale, yields remained under pressure in the cast bond market and the European Central Bank stepped into the secondary market after the auction, buying Italian debt to cap rising yields.“Overall, then, a reasonably positive outcome but with the still relatively elevated level of borrowing costs underlining the imperative of continued support from the ECB,” said Richard McGuire, a rate strategist at Rabobank in London.Requests for the four bonds on offer totaled more than 9 billion euros. The auction yield on a five-year BTP bond eased to 5.32 percent from a euro lifetime high of 5.6 percent Italy paid a month ago.Market pressures have pushed Italian bond yields over the summer towards levels that could in the long-term threaten the sustainability of the country’s 1.9 trillion euro debt.In a sign of continued tensions, the yield on the 10-year BTP bond on the secondary market rose to its highest level in over two months ahead of Thursday’s auction.Selling a 15-year bond for the first time since mid-July at Thursday’s auction, Italy tested market appetite for a long maturity which traders say is not covered by the ECB’s bond buying programme.It sold nearly 1 billion euro of an off-the-run 2025 bond.“The bid/cover of the 2025 looks OK,” said David Schnautz, a rate strategist at Commerzbank in London.“But I don’t feel very encouraged looking forward for the ultra-long supply, especially towards year-end from Italy."ECB’s purchases target mainly the five- to ten-year area, traders say.Italy last sold a 30-year bond in May.Italy plans to issue around 75 billion euros in the last quarter of the year, roughly equally split between short-tem bills and bonds.Rome has raised more than 16 billion euros this week.With a make-or-break summit of European leaders on Oct. 23 at which a comprehensive new Franco-German crisis plan is expected to be discussed, Italian domestic political turmoil has taken less prominence in investors’ minds.Friday’s confidence vote comes after Berlusconi’s centre-right government lost a key vote in parliament.Analysts said the government was unlikely to fall immediately but its ability to take action would be constantly hampered by internal disputes.

UPDATE 1-Italy fund eyes 150 mln euros investment in BPM

* Banker Arpe also eyes management control (Releads, adds details, background)By Andrea MandalaMILAN, Oct 17 (Reuters) - The head of Italian private equity fund Investindustrial said on Monday he is ready to invest up to 150 million euros ($206 million) in Banca Popolare di Milano as the campaign to take charge of the co-operative bank gathers pace.Investindustrial’s Andrea Bonomi is locked in a race with Italian banker Matteo Arpe to get a grip on the bank’s new management board, which will be appointed after a shareholder meeting scheduled for Saturday.BPM is overhauling its governance at the behest of the Bank of Italy to make management more independent from shareholders and attract new investors.The new dual-board system of the bank, which also plans an 800-million euro cash call, envisages a supervisory board representing its owners, and a management board with powers to run the bank’s operations.“We are prepared to take part in the capital increase up to the legal limit, which is 9.9 percent,” Bonomi said at a news conference, presenting his own slate of candidates for the supervisory board.The Investindustrial head and his representatives have the backing of a slate supported by the bank’s controlling union shareholder association, the Friends of Bipiemme, which with less than 4 percent of the bank controls shareholder meetings because of a one-head-one-vote rule.Bonomi, who pointed out investment was conditional on his inclusion in the management board, said there was no pact between his slate and that of the Friends association.He said Investindustrial had the resources to fund further capital increases at the bank if needed.The Bank of Italy, which carried out an audit of BPM in March, criticised it for opaque governance and the disproportionate influence of the Friends association.A rival trade union shareholder group has asked banker Matteo Arpe to join the bank’s management board.Arpe, head of the Sator fund, is known for his turnaround of the Rome bank Capitalia, subsequently taken over by Italy’s largest bank, UniCredit .($1 = 0.727 Euros)

I can’t tell you how excited I was this morning to find this image in my inbox. Agnese has taken on the role of getting the project started in Italy. She has done a great job and this notebook will soon be circulating in Italy!

Emma-Rose is starting up the project in Canada, so all you Canadians should be getting ready! 

Don’t forget to apply and if you’d like to get this project started in your country read this entry and send me an email at theartshareproject@gmail.com :)