In an analysis of the risk and return on Telecom Italia bonds September 19, we pointed out that either a rescue (in the form of an acquisition or a government bailout) or a sale of Latin American assets (TIM Participacoes) would probably be necessary. Today Telecom Italia CEO Bernabe
both a third party investment in Telecom Italia and the fact that a sale of Latin American assets was under consideration. A move in this direction could be very effective in bringing down the very high default probabilities that Telecom Italia shows right now.
We will continue to update the default probabilities for Telecom Italia daily.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.