Alain Debuysscher, senior credit officer at Moody’s in Milan, says: “The Italian government has stated that it wants to use securitisation to reduce public debt and put its finances under the scrutiny of the capital markets.” Public sector deals were already a key driver of ABS primary volumes in Italy in 2001, accounting for 28% of total issuance.
The Italian market is not wholly dependent on the public sector for deals. According to Moody’s ‘2001 review and 2002 outlook, European structured finance’ report: “Italy now leads the way in the diversity of each securitisation market. There were many new originators [in 2001] with large benchmark transactions, with seven transactions exceeding €1 billion.”
Debuysscher predicts that the Italian structured finance market will be boosted by real-estate transactions benefiting from legal and tax changes. The changes will make it easier for banks and companies to securitise rents. Currently the sale of property to a special purpose vehicle incurs taxation in Italy.
“Some easing at the tax and legal level is needed to help the commercial mortgage-backed sector,” says Debuysscher. Last year Italy was Europe’s third largest market for residential mortgage-backed securitisation, with 16 deals totalling €8.18 billion; in 1999 there were none.
Bankers are expecting that the Italian structured finance new issue market will total around €20 billion-€30 billion in 2002, spread across 40-60 deals. Last year there were 58 deals totalling €32 billion. Debuysscher says: “Last year was an exceptional year, but one asset class that we will see less of is the securitisation of non-performing loans.”
Whether the eventual figure is nearer €20 billion than €30 billion in 2002 will depend on the amount of public sector transactions. Problems could occur over the length of time taken to prepare deals and receive parliamentary approval. The number of transactions backed by consumer loans, credit card receivables and auto loans is also expected to pick up this year, after lagging behind other asset classes in 2001.