A consortium of nine Italian banks is launching a securitization of non-performing loans, the special purpose vehicle of which will be backed by Italian treasury bonds. In the event none of the loans are recovered, the treasury bonds will be sold to pay bondholders. Accordingly, the deal is double-A rated, the same as Italy's sovereign rating. The E413.5 million deal, Mutina, should close next month.
Roberto Paciotti, an analyst covering the Italian market for Standard & Poor's, does not expect to see many Italian NPL deals going forward because most banks have already securitized their relevant portfolios and the tax provision which makes these types of deals good for issuers from a balance sheet perspective expired in April 2001. Last year, there were only three Italian NPL securitizations.