Italians like Mattone-bond.

ROME - Italians like Mattone-bond. This is the revelation of the first real estate securitization operation by the Ministry of Economy which closed yesterday with 'success' through the placement of a bond loan in two tranches for 2.3 billion euros.
This securitization is destined to go down in history not only because it is unique and pioneering in Europe and not only because it was achieved in the record time - unpredictable for most - of two short months. Its historical significance also emerges in the unexpected geographical distribution of the subscribers of the securities: 57.2%, a very high and unprecedented share, was in fact conquered by Italians.
The sale of a portfolio of residential and non-residential properties of seven social security institutions with an estimated market value of around 5 billion euros was therefore speeded up for the first time with the sophisticated technique of securitization: an innovative and 'successful' operation, as the Ministry of Economy itself highlighted in a press release released yesterday. While awaiting the completion of the disposals - mostly to tenants - this real estate asset was sold to a special purpose vehicle (baptized without any stretch of imagination 'S.C.I.P.') which in turn placed bonds whose coupons and repayment of capital are guaranteed by the effective privatization of the portfolio made up of 26 thousand residential units and 389 buildings for other purposes. The entry into the state coffers of 2.3 billion euros (equal to approximately 4,600 billion lire) will take place on 21 December, the date of payment of the bonds: the actual sales of the properties, however, if all goes well as expected, will be carried out over the next 12-24 months.
This ambitious project has allowed Via XX Settembre to improve the deficit/GDP ratio for 2001: next Friday this bond loan will in fact allow the Treasury to reduce transfers to Enpals, Inail, Inpdap, Inps, Ipost and Ipsema. Consequently giving a breath of fresh air to the needs. But this is only one of the objectives hastily achieved by this unusual securitization. A few days before the markets close for the Christmas and end-of-year holidays, the four lead arrangers Banca Imi, Caboto-IntesaBci, Deutsche Bank and Lehman Brothers claim to have managed to sell these maxi-issues while containing the costs for the economy. These are bonds with the highest 'AAA' rating from the Moody, S&P and Fitch rating agencies, with an expected life of one year for 1 billion euros (yield at 17 basis points above the quarterly Euribor) and with an expected life of two years for 1.3 billion euros (at 22 hundredths of a percentage point above the three-month interbank rate): these two securities yield much more than BoTs or CTZs with a similar maturity, but they are not government bonds but asset-backed securities. That is, they weigh 100% in bank portfolios, unlike government bonds, and have a flexible maturity. If the divestiture plan is respected to the letter, then they will be reimbursed within 12 and 24 months. Otherwise, the legal duration may extend up to four years. This is the first of a long series of securitizations linked to the privatization of state property: the successful outcome of this placement will be decisive for the outcome of the entire multi-year 20 billion euro program announced by minister Giulio Tremonti.
The pioneering role of this operation, however, will be even more rewarding for the Italian system if the strong and unusual demand collected yesterday (almost 4 billion euros against 2.3 on offer) coming largely from Italy is also confirmed in the made-in-Italy securitizations in the coming years. The share of participation of Italian institutional investors in 'ABS' in the past has been disappointing, notoriously low: no more than 20 percent. A first positive signal came with the securitization of Lotto and Superenalotto, 44% of which was sold in Italy. The securitization of properties went much further: 57.2% with securities funds, asset management and Italian banks while the remaining 42.8% was divided between France, Spain, Benelux and to a small extent the United Kingdom. The share of France and Benelux is growing by virtue of the tax reform for non-residents just launched by the Ministry of Economy and Finance. It remains to be seen whether the strong and unexpected interest of Italians in this securitization will in the future prove to be a purely cyclical fact - linked to this enormous liquidity at the end of 2001 - or a structural one with a truly historic impact for the development of securitization in Italy.

source: from: Il Sole 24 Ore