Italian Bank Risk Surges as Capital Needs Fuel Bail-In Concerns
- Monte Paschi junior CDS signal 63% chance of default
- UniCredit, Intesa Sanpaolo subordinated bonds decline
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Measures of debt risk for Italian banks surged amid concern that government plans to shore up capital ahead of regulatory stress tests may require losses for junior creditors.
The cost of insuring Italy’s biggest lenders soared and bonds fell. Credit-default swaps on subordinated bonds of Banca Monte dei Paschi di Siena SpA surged to a record and now signal a 63 percent probability of default within five years.