The imbroglio surrounding securitizations that include short-term Italian leases has been put to rest. The country's parliament last Wednesday signed into law a decree that protects structured finance investors by overriding a prior court decision that threatened the bankruptcy remoteness of lease securitizations. The move is a major victory for the more than E8 billion Italian leasing market. "This approval by the Italian parliament allows us to be sure that this legal problem is completely solved," says Alessandro Settepani, a director at Fitch Ratings in Milan. He says officials from the rating agency will meet this week to discuss the law's impact on the outstanding transactions it has rated and that it will likely take outstanding lease-backed deals off its watch list.
The law voids the decision by Italy's supreme court, which ruled that lease contracts could be canceled in the event of a bankruptcy. That decision came to light last autumn, causing some lease deals to be put on hold or canceled and for the rating agencies to review the entire asset class (BW, 11/3). Since then, the government has taken steps to override the court, including introducing the now-passed law after market participants cried foul in November (BW, 11/10).
