Italian securitisation volumes slightly up on last year

The Italian securitisation market saw minimal growth last year, according to reports from the two major rating agencies Moody’s and Standard & Poor’s (S&P). Moody’s estimated a total of €36.7 billion in credit risk transferred – a 16% rise compared with 2001 – while S&P estimated total issuance of €27.8 billion against €27.4 billion in 2001. Moody’s figure includes unrated super-senior tranches, which are senior to the rated tranches, while S&P only includes rated tranches.

Following the strong growth seen in Italy’s securitisation market in 2001, issuance petered off last year, though the focus on innovation remained strong, Moody’s said. Italy remains the third-largest issuer in Europe after the UK and Germany. The most popular asset class last year by volume was leases, while the Italian government remained one of the biggest securitisers in the market, issuing the single biggest deal – a €6.637 billion real estate transaction called SCIP 2.

Although the government remains the largest participant in the Italian market, S&P warned that its reliance on securitising its assets to address its fiscal deficits is not a solution to its longer-term problems. "Securitisations can reduce the debt stock if receipts are used to retire government obligations, but they do not improve the budget balance on a structural basis," said S&P credit analyst Luc Marchand.

The Italian government will eventually run out of assets to securitise, analysts said, so securitisation is not an efficient way to address its long-term problems.

The main innovations of last year were by asset type. The Fiordilatte deal saw football receivables sold by Parma AC being securitised, while the Imser deal securitised the lease payments from Telecom Italia on a portfolio of telephone exchanges in Italy. Non-performing loans, which had been among the biggest asset classes securitised in the early phases of the Italian market, saw a sharp decline from 15% in 2001 to 3% last year. Most investors in Italian securitisations were stil based outside Italy.

For 2003, both agencies expect the market to show a pick-up in securitisation volumes, with a large slew of deals already in the pipeline. Moody's said it expects to see total issuance volumes in the €35 billion to €40 billion range.