FiatAvio is set to issue a rare Italian high-yield bond to replace bridge financing it took on when it was bought by Carlyle, the buy-out firm, and Finmeccanica, the aircraft engines maker.

A spokeswoman for Carlyle said FiatAvio, the aerospace business sold by Fiat for €1.5bn ($1.7bn) earlier this month, is working on a €200m high-yield transaction. The plan is to issue bonds with a 10-year maturity and sell them to European institutional investors. The bond will be rated.