A consortium of private equity firms intends to finance its announced acquisition of Istituto Centrale delle Banche Popolari Italiane (ICBPI) through the issue of around €1.1 billion senior payment-in-kind (PIK) toggle notes by a newly established entity, MercuryBondCo PLC (MercuryBondCo). The transaction is conditional on the Bank of Italy's approval. We are maintaining our CreditWatch with negative implications on the 'BB+' long-term rating on ICBPI. We are also assigning a preliminary 'B' rating to MercuryBondCo, whose debt is expected to be guaranteed by the consortium's holding companies that we understand will become the main owner of ICBPI, and to its senior PIK toggle notes. The CreditWatch negative on ICBPI reflects that we would likely lower our long-term rating on it
