Milan-listed business intelligence firm Gruppo Cerved launched Cerved Money&GO, a fintech platform for the sale of commercial credits (see here a previous post by BeBeez). A special purpose vehicle structured by Banca Imi and Banca Finint will buy the credits that the companies will sell and will issue asset backed securities that institutional investors will buy. Banca Imi and Finint are said will be among the investors. Cerved Money&GO will allow companies and investors to evaluate credits on the grounds of the data that Cerved Payline database provides. In September 2019, Cerved started to explore options for Cerved Credit Management, its Npl division. Cerved may sell the asset, carry on an integration or a partnership with industry peers. Intrum, Bain Capital, and doValue are interested in the asset which is worth in the region of 400 million euros.
Rossini sarl, the parent company of Milan-listed pharma group Recordati, controlled by CVC Capital Partners and its co-investors PSP Investments, Stepstone, and Alpinvest, issued a Luxembourg-listed secured high yield bond worth 650 million euros with a floating rate of three months euribor plus 3.875% and due to mature in 2025 (see here a previous post by BeBeez). Proceeds from the bond will be used to refinance the 650 million euros senior secured bond issued in October 2018 that pays a coupon of 3 Months euribor (with a 0% floor) plus 625 basis points and due to mature in 2025 that helped the investors to launch a public tender offer on Recordati. CVC and the other funds paid 3 billion to the Recordati Family for acquiring control in the eponymous business.
Chinese Sofima Automotive Filters, a subsidiary of Italian Ufi Filters, received a renmimbi-denominated financing worth 5 million euros by Cdp, financed by proceeds from the Panda Bond programme (see here a previous post by BeBeez). The Shanghai branch of Mps acted as facility agent. Giorgio Girondi founded Ufi Filters in 1971 and in July 2018 press reports said that he hired Rw Baird for finding an investor. The company has sales of 440 million. Nunzio Tartaglia, the haed of the corporate division of Cdp , said that after such a transaction, the firm invested almost half of the resources of Panda Bond. Cdp previously helped Deutz Fahr Machinery, a Chinese subsidiary of Italian tractors producer SDF (SAME-Deutz Fahr), to issue a 50 million (393 million renmimbi).
Banca Agricola Popolare di Ragusa is carrying on a securitization of distressed credits amounting to 400 million euros (see here a previous post by BeBeez). The bank i salso building a credit recovery platform in partnership with a servicer. In September 2018, BAPR sold to spv Ibla a portfolio of distressed credits amounting to a gross value of 348.6 million.
Italy’s central bank governor Ignazio Visco said that the Italian economic recovery led to an improvement of banking assets and helped the recduction of distressed credits. However the potential downturn in the macroeconomic scenario might stop this virtuous engine (see here a previous post by BeBeez). Visco was speaking at the 95th World Saving Day that the Italian Association of Banking Fondations and Saving & Loans (ACRI) held in Rome on 31 October. So Visco pointed out that banks should collaborate with turnaround investors whomight help them to lower UTPs exposures (BeBeez News Premium’s subscribers can download here the latest BeBeez NPLs Report, find out here how to subscribe to BeBeez News Premium for just 20 euros per month). Visco also stressed that the activity of credit servicers is crucial for the the ultimate aim of refcovering distressed credits (BeBeez News Premium’s subscribers can download here BeBeez’s July 23rd Insight View about credit servicers’ profitability in Italy). Finally Visco reminded that improving profitability is necessary, not only for Italian banks both to face the challenges posed by competitive pressures, prudential regulation, the new European crisis management framework, and to face developments in technological innovation in the financial field (BeBeez News Premium’s subscribers can download here the latest BeBeez Fintech Report).
Banca Ifis and Credito Fondiario will no longer create a platform for handling distressed credits (see here a previous post by BeBeez). C Talks ended for governance issues. Sources said to BeBeez that Banca Ifis originally wanted to spin off and list Ifis Npl, its Npl unsecured consumer division, on the ground of an enterprise value of one billion euros and acquire Credito Fondiario, valued about 400 million euros, with Credito Fondiario’s shareholders who would have reinvested in the new entity. The deal structure however changed when the two firms decided to create a vehicle for handling the distressed credits of both, but not their portfolios of NPLs. On the grounds of these financials, Credito Fondiario would have had a stronger governance power, it could have been of up to 70% of voting rights. In 1H19, Banca Ifis portfolio had a face value of 16.4 billion euros, while the bank’s subsidiary FBS managed a portfolio of NPLs on behalf of third parties for 6.4 billions. In 1H19, Credito Fondiario had asset under management with a gross value of 52.1 billions (including those of the partnership with Banco Bpm), while the portfolio of proprietary investiments was of 6.5 billion. Iacopo De Francisco, the coo of Credito Fondiario, said that his firm is still interested in playing a catalyst role in the Italian servicing sector and may list in the future. On the other hand, Banca Ifis announced that raised its stake in FBS from 90% to 100% after having acquired the shares of Paolo Strocchi (7.5%), Elena Paola Ruo, and Giorgio Fedocci (both holding 2.5%) for 12.2 million. Strocchi and Ruo will no longer be the ceo and coo of FBS, nor will sit in the company’s board. Banca Ifis acquired 90% of FBS in May 2018 for 58.5 million.
Selecta, the Swiss vending machines company that belongs to Kkr and that owns Italy’s Argenta since 2017, refinanced part of its debt with the issuance of a senior secured bond of 100 million euros with a 5.875% coupon and a senior bond of 50 million paying a floating rate coupon (see here a previous post by BeBeez). Both the issuances are due to mature in 2024. The company will invest the proceeds it raised for paying its banking revolving facilities. At the end of June 2019, Selecta had a 5.3X net debt to ebitda ratio. This is the third debt refinancing for Selecta. In 2014 the company issued a 550 million high yield bond while Kkr poured 220 million through a PIK financing for avoiding a debt restructuring. In March 2018 Selecta issued a three-tranches senior secured bond of 1.3 billion due to mature in 2024. Selecta invested the majority of such proceeds in repaying its liabilities and a small part of them in reducing Argenta’s debt.
Covisian, a provider of tools and software for CRM that belongs to Aksìa Capital, acquired Unitono Contact Center, Uniglobal Insurance Mediation, Avanza Colombia, and Avanza Assicurazione from Avanza (See here a previous post by BeBeez). Furthermore, Covisian Spanish subsidiary GSS acquired the Business process outsourcing unit of Avanza. Equita Private Debt subscribed a subordinated bond that Covisian issued. Covisian has sales of above 330 million euros.
Unicredit concluded the securitization of a portfolio of Npls worth 6.1 billion euros through the SPV Prisma and will ask for the Gacs warranty for the senior tranche (see here a previous post by BeBeez). Prisma issued three classes of shares: 1.21 billion of senior abs of class A, 80 million of mezzanine shares of class B, and 30 million of junior notes of class J. The shares of class A and B will pay a floating rate of 6 months Euribor plus a 1.5% and 9% spread senior and mezzanine notes received from Moody’s a rating of Baa1 and B3 and from Scope a rating of BBB+ and B-. A financial firm that doesn’t belong to Unicredit will buy 95% of mezzanine and junior notes, while the vendor itslef will retain 5% of the notes as originator firm (BeBeez News Premium subscribers can read the last Insight View of BeBeez about NPLs and the securitization reform that EBA aims to implement). Italfondiario and doValue are acting as master and special servicer for such securitisation, while Securitisation Services (part of Banca Finint Group) holds the roles of monitoring agent, calculation agent, representative of noteholders, and back-up servicer facilitator. UniCredit and JPMorgan acted as placement agent of the mezzanine and junior notes. JPMorgan is also acting as settlement agent. At the end of June 2019, Unicredit’s gross distressed credits amounted to 34.4 billion (37.6 billion at the end of March 2019) with the gross NPE ratio of 7% (7.6%), and a 61% coverage ratio (61.7%). Core distressed positions amounted to 18.7 billion (19.8 billion), with a gross distressed credit to the total gross credit ratio of 3.9% (4.2%) with a coverage rate of 56.7% (58.1%). Non-core distressed credit amounted to 15.7 billion (17.7 billion) with a coverage rate of 66% (65.8%).
The panelists and attendees of Milan Real Estate Summit 2019, an event that DLA Piper arranged with CBRE, Cushman&Wakefield, GVA Redilco, JLL, and Urban Land Institute – ULI, said that the Italian real estate market is upticking, but distressed credits are still an issue (see here a previous post by BeBeez). According to a DLA Piper’s quali-quantitative survey of ceos and cfos of fund managers that invested in Italy at least 500 million euros in the last three years that conducted the most attractive sectors are offices (71.9%), retail (52.6%), logistics (36.8%), residential (33.3%), Hotel & Leisure (28%), student housing (19.3%), senior living (8.7%), and infrastructures (3.5%); 10.5% invested in other sectors. A 98.15% of these investiments generated a good return. Investors have a good sentiment for the Italian and European real estate sector, while 37.10% of investors increased its interest for the Italian market. In 2020, investors will focus mostly on offices (64.5%) and retail (25.8% – from 52.6% in 2018). Milan (80.9%) and Rome (65%) are still the best investment targets. Sabina Kalyan, Global Chief Economist & Head of Europe Research of CBRE, said that the volume of the transaction is decreasing in London, Hong Kong (for political issues), and Manhattan (for supply issues). However, since the main central banks decided to cut interest rates, the yields of real estate assets in Italy may record a 6.8% top growth rate. On the ground of such data, CBRE is risk-in for Italy where real estate assets have still fair price on a risk adjusted basis. Mirja Cartia, the ceo of Restar (who recently merged with Guber) and Gaudenzio Bonaldo Gregori, ceo of Pillarstone Italy, said that the secondary market of Npls may generate interesting yields, even though the new regulation is emphasizing on deleveraging. Alessandro Gatto, the co-Head of Structured Finance Southern Europe of JPMorgan, said that the GACS guarantee of the Italian Government for distressed credits catalysed the interest of global hedge funds that broken the oligopolistic cartels of local servicers. Italy is an interesting market as it allows international funds to leverage more their investments.
Banca Intesa Sanpaolo sticks on its derisking strategy ahead of the target of its 2018-2021 business plan (see here a previous post by BeBeez). In 21 months, the bank achieves 80% of its four-years target, said ceo Carlo Messina on the sidelines of the quarterly results presentation. The amount of the bank’s distressed credits is of a gross value of 31.6 billion euros (14.3 billion of net value) down by 7 billion from 2018 and by 33 billion at the end of September 2015. The bank’s business plan set a target of a gross value of 26.4 billion of distressed credit (net value of 12.1 billion). The 3Q19 figure is including the UTPs portfolio with a gross value of 2.7 billion that Intesa is selling Prelios. The amount of NPLs is of 19.9 billion, UTPs are of 11.6 billion, while off-deadline credits amout to 500 million, while the total gross amount of distressed credit stands at 31.6 billion. The bank’s ratio for the coverage of distressed credit is of 54.8% (+1.2% yoy).
Zenith Service carried on a securitization of mortgages and SMEs financing for 220 million euros that Banca del Fucino and Banca Igea issued (See here a previous post by BeBeez). Zenith Service created the spv Fucino Sme and is acting as corporate servicer and back-up servicer, while Banca Igea is the servicer of the transaction. The spv will issue two classes asset-backed securities for institutional investors.