MILAN May 25 Senior bonds issued by Italian
bailout candidates Popolare di Vicenza and Veneto Banca fell
sharply at open on Thursday after sources said EU authorities
have not budged from their demand that private investors
contribute 1 billion euros to the rescue.
The two regional banks must fill a combined 6.4 billion euro
capital shortfall and they have asked to tap state aid under EU
rules that allow a government to support an ailing bank only to
help it withstand a potential adverse scenario.
Sources said on Wednesday the EU Commission had turned down
an Italian request to lower the 1 billion euro private capital
injection demanded to authorise the state bailout.
So far only junior bondholders stand to take a loss in the
rescue. Hitting also senior bondholders would be a way to raise
private capital to fill the shortfall.
A Milan-based trader said a Popolare di Vicenza October 2018
bond fell as much as 3.5 percentage points at open to yield
28.88 percent. Also a Popolare di Vicenza March 2020 bond and a
Veneto Banca May 2019 senior bond fell sharply.
(Reporting by Valentina Za)