Monte dei Paschi sniffs out demand for pricey new debt

Italy’s Banca Monte dei Paschi di Siena has been sounding out investors to find potential buyers for new debt, bracing itself for the possibility it may need to take the expensive step if ordered to by regulators.

Managers at the lender met with investors in London earlier this month, in meetings arranged by JPMorgan, to update them on its progress just over a year after the Italian government rescued the world’s oldest bank.

Two hedge fund managers present said the bank tried to gauge their appetite for potential tier-two bonds, which get sucked into rescue bailouts and count towards key capital ratios. The bank suggested it might be willing to privately offer about €200m of such debt to…