Something is moving in the Italian capital market. Experts talk about an important evolution in securitization, hitherto in the hands of very few (and very rich) law firms and banks.
The agreement concluded in March between iSwiss, a financial depository company, and the Bolognese advisor Legal Credit Srl, created the first platform for securitizations outside the banking sector. The union between the two companies provides all the services necessary to structure a securitization operation: from the servicer to the trustee; from the paying agent to the custody services; from the legal advising to the calculation agent and auditing services.
To date – says the CEO of iSwiss, Dr. Aleo Christopher – securitization in Italy has simply been a luxury reserved for a very restricted number. Although the European Union has pushed on securitizations to expand access to the credit market for SMEs, in Italy, using this term outside the banking system is still taboo. It is a pity because companies need a large and competitive capital market to meet their liquidity and investment needs.
Effectively, a company can turn directly to the market to obtain liquidity with securitization, ceding its future cashflow rights. And not only trade receivables. If everyone securitized, the banks would lose their monopoly over the capital market in Italy that they currently enjoy. Their position would have simply been blown up. That’s why it’s a taboo, concludes Aleo.
Moreover, as far as Aleo Christopher is concerned, the idea that securitization is a tool reserved for those who bill tens of millions is simply not true. “On the London telematics market, you can place receivables above EUR 200,000. These numbers are widely available to an SME. Why can’t I give my receivables directly to investors?” Aleo asks.
The other obstacle is the monstrous costs that law firms demand in return for the advice and legal accounting management of a securitization transaction. “For a law firm – ‘at the table’ – continues Aleo – we are talking about hundreds of thousands of euros in fees just to enter and start talking about a securitization project.”
For this reason, the partnership signed today with Legal Credit is fundamental for us. Legal Credit was founded as a debt collection company that is the core business in a securitization process and thus has extensive experience in managing securitization transactions. Their skills for the establishment of trusts and EEIG are renowned – they have created them throughout Italy – and they are fundamental for the management of special purpose vehicles to guarantee investors.
“Right now, Legal Credit, with their SPV Finance vehicle, is placing a tranche of securities worth over EUR 185 million. We provide them with paying agent and custody services,” concludes Aleo.
