According to market sources, there may soon be new provisions under the Italian securitization law that would allow small- and medium-sized enterprises (SMEs) to create the critical mass necessary to access the securitization market.
As of now, these smaller-sized entities have not been able to tap the market on their own, largely due to the servicing costs involved. Italy has already seen smaller banks grouping together to issue mortgage-backed securitizations. So the next step may very well be the grouping of SMEs.
"It's not happened yet in Italy but it makes sense, because on their own it can be quite expensive," said one rating analyst. "We've seen some SMEs place trade receivables in non-Italian conduits which are privately rated and short-term, but, judging by the inquiries we've received, these companies would prefer a medium-term program."
The problem is that, as of yet, there is nothing under the law that stipulates just how an SME initiative would work. According to one Italian solicitor, however, there are changes about, including the development of master trust structures in Italy (see ASR 6/16) as well as a new legal initiative that would allow banks to promote SME securitizations. "Banks are assisting local entities to help small- and medium-sized businesses to gain access to the securitization market and raise money at lower costs," he said.