THE RATIONALE OF BASKET-BONDS AS AN ALTERNATIVE FINANCING OPTION FOR ITALIAN SMEs

Abstract

Throughout Europe, and Italy in particular, following the crises of 2008 and 2011, the banking system came under a shock. This exogenous factor paired with more stringent and pro-cyclical regulations by European banking authorities had the inevitable consequence of causing a sudden credit crunch, particularly felt in non-financial companies. The negative impacts were more evident in EU’s peripheral countries, whose firms had to come to terms with their once trusted banks closing the taps and asking for progressively more stringent conditionalities. Since for most companies external financing is a vital tool, adaptation led them to seek for alternative forms of capital raising present in the market, rather than from banks themselves. In this dissertation, the instrument of Market-Based financing of “Mini-Bonds” will be analyzed, with its effects on the issuing companies. Specifically, it will be deepened the new evolution of Mini-Bonds, namely Basket-Bonds (securitized Mini-Bond issuances), with their advantages and disadvantages, presenting a case study.