Italy Steams Ahead


Italy's securitization market shows no signs of slowing down in 2000, after an action packed 1999. And once again, deals backed by non-performing loans and delinquent assets are expected to dominate the market.

First in the queue will be J.P. Morgan, which recently bought E1.55 billion ($1.6 billion) worth of mostly property-related non-performing loans from Banca Nazionale del Lavoro (BNL) on a non-recourse basis.

Rome-based BNL said that the purchase was the first step in the securitization that was announced in October last year (ASRI 10/4/1999 p. 6), adding that the sale "will generate a significant improvement in the asset quality of the group" and cut its NPLs by 18%.

The deal will be JP Morgan's first public term securitization in Italy. The bank was chosen ahead of two banks that have already closed Italian NPL deals, Morgan Stanley Dean Witter and BNP Paribas.

Coming up behind will be Mediobanca division, MB Finstrutture, which was recently mandated to advise on an NPL deal from Italian regional bank Banca Popolare dell'Etruria e del Lazio. The deal is expected to be worth around E155 million.

Meanwhile, a source close to the Italian treasury confirmed that the treasury plans to return to the markets this year and in 2001 with further securitizations of delinquent social security contributions due to the Istituto Nazionale Della Previdenza Sociale (INPS).

The two deals will be of similar size to INPS' first foray into the asset-backed markets, a securitization worth E4.55 billion at the end of 1999.

That deal was underwritten by Merrill Lynch, BNP Paribas and Caboto, but structured by Morgan Stanley, Warburg Dillon Read and San Paolo IMI. It was backed by assets totaling over E40 billion.

The source also confirmed that the treasury will also be leading another Italian government agency, the Istituto Nazionale Per l'Assicurazioni Contro Gli Infortuni Sul Lavoro (Inail), to the securitization markets this year. Inail governs occupational insurance payments for workers and a transaction will be backed by delinquent contributions.