Veneto Banca SpA and Banca Popolare di Vicenza SpA issued state-guaranteed bonds worth €3.6 billion.

Veneto Banca issued a state-guaranteed bond worth €1.4 billion, underwritten entirely by the troubled lender. Popolare di Vicenza announced its second state-guaranteed bond issuance, also fully underwritten by the bank, with a total nominal value of €2.2 billion, and a 0.50% coupon, due June 1, 2020.

The bonds can either be retained to use as collateral for funding operations or sold on the secondary market to generate liquidity.

The two banks are seeking European approval to receive a precautionary recapitalization from the Italian state ahead of a merger, but have been instructed to raise private capital first.