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Astaldi’s Rollercoaster

09 May 2018 by lberuti

Once again credit indices have traded in very narrow ranges today. iTraxx Crossover did not move more than a couple of bps away from Tuesday’s close, but some of its constituents commanded some attention, particularly ASTIM ( Astaldi Spa ). The issues of the Italian company, which mainly designs, develops and operates public infrastructure and large scale civil engineering works, begun when they announced last November that they would organise a share sale to bolster their finances after writing down about €230mln because of their exposure to Venezuela. The drama might be about to end. There were reports overnight in the Italian press outlining a plan for an equity raise. A company’s board will be held in a few days and it should approve a €300mln capital increase that would see the participation of IHI Corporation, a Japanese company known for constructing long suspension bridges. The initial reaction was a 19pts tightening of ASTIM’s 5-year risk premium, which was later faded by investors. Nevertheless, ASTIM’s CDS closed the day 11pts tighter, which is a cool 725bps. The cost of insuring €1 of ASTIM’s debt for 5 years is now 26cts upfront plus 5cts per year. That is half what you had to pay barely a month ago.