Italian securitization is picking up even more speed as deals that have been structured following the passage of the country's securitization law begin to come to market.

As previously reported, the largest deal nearing launch comes from Inps, the Italian state pensions body. Morgan Stanley Dean Witter and Warburg Dillon Read are lined up against a consortium of JP Morgan, Deutsche Bank and Paribas in a beauty parade to decide who will underwrite the sale of E4 billion worth of bonds.

MSDW has reportedly offered bridge financing that will allow a deal to be launched after next year, yet allow Inps to raise the cash by its year-end deadline. If that happens, market experts suggested that it makes it more likely that the deal may eventually be launched without a state guarantee.

Other Italian issuers that may brave the markets in the next few weeks include Italfondiario, which is expected to launch a transaction worth around E1 billion backed by performing assets via Greenwich NatWest. In recent weeks GNW has privately placed over E1.2 billion worth of notes backed by non-performing mortgages originated by other Italian banks.

Italfondiario will not be on its own as several Italian banks are close to launching "balance sheet" collateralized loan and bond deals during the next month.

First in the queue is Banca di Roma, which at presstime was set to launch a E270 million transaction, called Caesar Finance, backed by a portion of the bank's Eurobond investment portfolio. The deal was arranged by Donaldson, Lufkin & Jenrette, in what is thought to be its first European public securitization, and co-arranged by Banca di Roma. The senior tranche is rated triple-A by Moody's and Fitch IBCA.

One ABS pro said that Italian banks "across the board" would be using securitization to manage and improve their balance sheets over the next few months, as the banking sector copes with the ever-increasing pressure to consolidate.

In the longer term, several Italian state bodies are examining using securitization as a way to privatize their property portfolios without having to sell property directly into the market and run the risk of depressing property prices, according to experts in Milan.

Inps, Inpdap and Inail, the three main state social securities bodies, are talking to bankers about the feasibility of securitizing their property portfolios ranging from office buildings to residential properties and even historic palaces as are privatized or soon-to-be-privatized companies such as Ferrovie Statali (the state railway company), Enel (the state electricity company) and Poste Italiane.

"There is no reason that they have to securitize as opposed to sell directly or sell and lease back, but it is certainly one option that they are considering," said an Italian securitization expert. "Given that all these sales could happen over the space of the next year or two it would have the advantage of not dragging down prices too much and allowing these companies to raise the most money. At least, that is what the securitization bankers are telling them."

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