ABS investors bet on state support for MPS

摘要

Investors are picking up Italian asset-backed bonds again, placing bets that the state will step in to save troubled lender banca monte dei paschi di siena if its last-ditch recapitalisation effort falls short. Secondary spreads in Italian ABS and RMBS remained mostly steady after the country's referendum vote in early December, moving out by just 1bp-2bp, JP Morgan research shows. MPS bonds such as its Siena 2010-7 issue widened by 5bp-10bp to 70bp, although they are fairly illiquid, traders said. However, there was barely any trading as investors held on to their bonds and kept a close eye on Italy's third largest bank, whose recapitalisation plans were caught in the midst of the political turmoil that followed the vote.