ITALY Law and Practice Contributed by: Francesco Dialti, Vincenzo Cimmino, Valentina Bombino and Lucrezia Ghezzi, CBA Studio legale e tributario
1. Loan Market Overview 1.1 The Regulatory Environment and Economic Background
This increases the transaction costs and also requires a significant minimum issue size to be efficient. 1.4 Alternative Credit Providers In order to increase the competitiveness of the Ital- ian lending market, a number of developments have been introduced by the Italian legislator in the last ten years, including: • new players have been given access to the lend- ing market by including them among the entities licensed to carry out lending activities in Italy; • non-listed companies have been given access to bond financings; and • the tax regime has been made more favourable by extending the application of certain tax benefits. These changes have given rise to an alternative mar- ket, alongside bank finance (especially in the acquisi- tion finance sector). To date, new players have been most active in mid- sized deals. They often provide a mezzanine/subor- dinated tranche to fill the gap between the maximum leverage ratio allowed by senior (bank) lenders and the financing needs of private equity sponsors. Another area where new players have become active is the financing of real estate developments, due to the higher costs (in terms of risk-weighting) for banks to finance them. 1.5 Banking and Finance Techniques Due to principle of reserve of financing activity, an alternative structure used by all foreign funds for the purchase of receivables in Italy (excluding, after the implementation of the SMD Directive, NPLs originated by banks and financial intermediaries (see 3.9 Recent Legal and Commercial Developments )) (which is also a reserved activity; see 2.1 Providing Financing to a Company ) is the establishment of an Italian SPV, incorporated under Italian Securitisation Law (Law No 130/1999), which issues notes subscribed by the investor(s). The funding structure of an Italian law securitisation transaction is very flexible. It entails an investment made through the subscription of asset-backed secu-
In 2025, the Italian loan market has experienced mod- erate growth, partly driven by a reduction in interest rates which began in 2024. This trend has had an impact, in particular, on LBO deals. The mid-size acquisition finance sector has been very active. Project finance remains an important area, in line with global trends supporting the energy transition. Conversely, due to higher regulatory costs in terms of risk-weighting, it is increasingly more difficult and expensive for Italian banks to finance real estate developments. This has created opportunities for new players and new financing techniques to enter into the sector. 1.2 Impact of Global Conflicts The Russian military aggression against Ukraine caused disruption at the beginning of 2022, not only for companies active in that region, but for the whole Italian economy, especially due to gas supply issues with Russia. However, the impact on the loan market has remained limited in 2025. Conversely, trade tensions, the introduction of US tariffs and shifting global supply chains have given rise to new challenges Italian banks are now closely assessing the geopolitical risks associated with a cross-border transactions. 1.3 The High-Yield Market There has been a significant growth in the high-yield market in the first six months of 2025. However, it still remains a secondary source of financing. One reason for this is the cost of implementing a structure of the type typically used for these trans- actions, where private placement documentation is governed by New York law.
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