◆ A new NPL threat to Italian banks ◆ Hybrid capital gets a makeover ◆ Covered bond liquidity ◆ SSA market finds its rhythmReaction in the markets to Italy's plan to allow bad lenders to buy back their loans at a small premium to what the owners paid for them has been both critical and robust. Is it just private investors griping about not being allowed to make enough money, or is there something bigger and more fundamental at stake for Italy's banking sector? We find out.We delve into what Moody's revision to how it assesses hybrid capital means for issuers and give an update on some innovative deals in the asset class for multilateral development banks.Meanwhile, news from Munich where we took the pulse of the covered bond market at its biggest event of the year and, finally, a sense of direction in the SSA market this week as two European institutions weighed in in the form of the EU and the ECB.