ROME - In light of Italy's newfound status in European securitizations, there was a lot to say last week at the second annual Issuers & Investors' Summit on Italian & Southern European ABS.
Second only to the U.K. securitization market, Italian structured finance accounts for volumes that had swollen to $15.4 billion by the end of the third quarter this year. According to Standard & Poor's, the market is well on its way to reach the $20 billion mark by the end of the year.
A total of 38 transactions had already been completed by the end of the third quarter and about half that tally was completed in the second quarter. The breakdown of different structures issued so far this year includes $6.7 billion of ABS; $1.7 billion of CDO/CLO/CBO; $2.5 billion of CMBS; and $4.6 billion of RMBS. "The Italian ABS market has been particularly innovative, with some of the more noteworthy European transactions this year emanating from this jurisdiction," said an analyst at S&P.
Beyond an incredible growth pattern, the Italian market has also provided some of the more innovative structures in European securitizations, largely provided for under the securitization law 130. "Since the law was passed in 1999, the Italian securitization market has flourished, underscored by strong creativity," reports S&P.
An important announcement was made on Day One of the conference, when the Onorevole Publio Fiori, the Vice President of the chamber of deputies, announced that the Italian government was about to approve a new series of infrastructure projects which would be funded 50% through public funds and European Union (EU) contributions. A further 50% would be funded through private funding.
These were described as project finance securitizations and are probably more closely related to the U.K.'s Project Finance Initiative (PFI) or Public Private Partnerships (PPP).
A series of motorway projects and the famous bridge linking Sicily to the mainland were a few of the infrastructure projects mentioned that would seek to be funded in this way. In respect to the motorway projects, one of the ways the government plans to employ securitization methods is through the use of future toll-road payment securitizations.
There would of course be the need for a new law that would allow future-flow securitizations (at present not allowed by law 130, the 1999 securitization law). The government was also still debating whether a State-guarantee would be incorporated.
Italian infrastructure expenditure in these last few years stands at around 1.5% of GDP, which compares to a European average of 2.7%. In light of this the Onorevole Publio Fiori underlined the necessity for the Country's infrastructure development'.
The clear message from the conference was that the state's use of securitization is set to continue at a fast pace following on from the 4.65 billion securitization of social security contributions in arrears owed to the Societa di Cartolarizzazione dei Crediti INPS SpA by Italian corporates, self-employed individuals and agriculture enterprises.
Since then a 1.35 billion securitization of a pool of performing and non-performing receivables representing contributions payable by Italian entities in respects of compulsory insurance premiums covering risk at work, originated by INAIL Societa di Catolarizzazione p.a.; and a $525 million transaction securitizing a pool of export credit transactions originated by Instituto per I Servizi Assicura del Commercio Estero (SACE) are government deals that have been completed in the last few years.
In Parliament, at the time of the conference, waiting for approval was law 350 governing the lotto securitization and law 351 the government's real-estate transaction. Law 351 was approved by the chamber of deputies this week and was now seeking approval from the senate.
