Buy Creval and BPER, Sell BTPs Before Italian Referendum: UBS
Source: BFW (Bloomberg First Word)
Tickers
BPE IM (Banca Popolare dell'Emilia Romagna SC)
2334520Z IM (Creval Scarl)
People
Ignacio Cerezo (UBS Securities LLC)
Nishay Patel (UBS Global Asset Management Japan Ltd)
Topics
Italy Constitution Change
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UUID: 7947283
(Bloomberg) -- The possibility of a “No” vote in Italy’s Dec. 4 referendum on constitutional reform continues to present a risk to Italian bond spreads, UBS analysts Nishay Patel and Ignacio Cerezo write in client note.
Alert: HALISTER1- A “Yes” may tighten 10Y Italy/Germany spreads by 5bps-10bps initially, while a “No” vote may spur widening to more than 155bps
- Continue to prefer long 10Y Spain vs Italy; recommend hedging against a potential escalation of Italian risks by selling 10Y Italy vs USTs, targeting 0bps
- For Italian banks, risks are positively skewed as the upside in a “normalization” scenario supported by a “Yes” vote outweighs the limited downside in a more negative scenario potentially triggered by a “No” vote
- Favor banks with excess capital and discounted valuation such as Creval and BPER; also has a buy rating on Intesa
Source: BFW (Bloomberg First Word)
Tickers
BPE IM (Banca Popolare dell'Emilia Romagna SC)
2334520Z IM (Creval Scarl)
People
Ignacio Cerezo (UBS Securities LLC)
Nishay Patel (UBS Global Asset Management Japan Ltd)
Topics
Italy Constitution Change
To de-activate this alert, click here
UUID: 7947283