- This agreement will provide new funding to over 100 Italian companies
- With this European Guarantee Fund (EGF) operation, lending to SMEs and mid-caps has now reached more than €6 billion.
This new agreement raises over €630 million of funding to help Italian SMEs and mid-caps hit by the pandemic through the alternative Basket Bond instrument.
This is the main goal of the €200 million guarantee operation entered into by the European Investment Bank (EIB) and Cassa Depositi e Prestiti (CDP) and signed by EIB Vice-President Gelsomina Vigliotti and CDP CEO Dario Scannapieco.
This initiative will be supported by the European Guarantee Fund, which is part of the European Union's €540 billion package of measures to tackle the economic difficulties and production slowdowns caused by the coronavirus pandemic.
Specifically, the guarantees issued by the EIB will enable CDP to invest in low-interest and longer-term Basket Bond operations: the aim is to enable more than 100 firms (SMEs and mid-caps with up to 3 000 employees) to finance their growth projects through an alternative channel to banks without losing jobs.
This agreement complements those recently signed between CDP and the EIB Group, all secured by the EGF guarantee: the first in July and the second with the European Investment Fund (EIF) in August, both guaranteed to the tune of €6 billion in total.
EIB Vice-President Gelsomina Vigliotti said: “The EIB Group is Europe’s leading development bank, pioneering new financial instruments to support business, innovation and climate. This operation is the result of the sound relationship between the EIB and CDP, aimed at supporting the economic recovery of Italian businesses and the liquidity requirements of our medium and small enterprises, which are the driver of our economy”.
“This agreement confirms CDP’s capacity for financial innovation and makes available to Italian SMEs and mid-caps an instrument like the Basket Bond, which adds to and is complementary to traditional forms of financing. Thanks to this operation, which is in keeping with the objectives of the 2022-2024 Strategic Plan, CDP is consolidating its long-standing and fruitful collaboration with the EIB to support sustainable investment by Italian businesses and the growth of the country’s economy," said CDP CEO Dario Scannapieco.
The funding programme comprises two phases: during the first phase, SMEs will issue bonds ranging from €2 million to €25 million (so-called mini-bonds) in support of special purpose vehicles (SPVs) established by arranger banks, which will subscribe to them by making available funds, while CDP and other investors will then purchase from these SPVs securities secured by these mini-bonds (so-called ABS — Asset-Backed Securities) for an equivalent sum. The EIB’s action will absorb up to 90% of the losses that may develop on each bond issue up to a proportion of 35% of the mini-bond portfolios, amounting to a maximum of €200 million for the programme as a whole. Thanks to the substantial leverage effect of the operating scheme, it is considered that new loans to SMEs and mid-caps totalling over €630 million can be unlocked.
Background information
The European Investment Bank (EIB) finances projects in four priority areas: infrastructure, innovation, climate and environment, and small and medium-sized enterprises (SMEs). Between 2019 and 2020, the EIB Group provided €23 billion in financing for projects in Italy.
The European Guarantee Fund (EGF) was created by the EIB Group (EIB and EIF) with contributions from Italy and other EU Member States to shield companies suffering from the COVID-19 crisis. Using nearly €25 billion in guarantees, the EGF enables the EIB and the EIF to quickly make loans, guarantees, equity and other financial instruments available mostly to SMEs and mid-caps. The EGF forms part of the package of recovery measures put in place by the European Union, with the objective of providing a total of €540 billion to support the hardest hit sectors of the EU economy.
Cassa Depositi e Prestiti is the national promotional institute which has been supporting the Italian economy since 1850. It is committed to accelerating the industrial and infrastructural development of Italy to boost its economic and social growth. CDP focuses its activities on sustainable development at local and regional level, supporting the innovation and growth of Italian enterprises, also in the international arena. It partners local authorities, in a financing and advisory capacity, to create infrastructure and improve services of public value. CDP also participates actively in international cooperation initiatives to implement projects in developing countries and emerging markets. Cassa Depositi e Prestiti is entirely financed by private capital, through the issuance of postal savings bonds and postal savings passbooks, and through issues on national and international financial markets.