Revitalising SMEs through Minibonds and Basket bonds

Revitalising SMEs through Minibonds and Basket bonds

Study by the Polytechnic of Milan, CDP and CELF Orrick on the importance of alternative finance instruments

Allowing companies in difficulty not only to find the liquidity they need to finance their medium- to long-term objectives, but also to strengthen their capital structure in terms of both diversification of sources and maturity. All this is made possible with Minibonds and Basket Bonds. This is one of the strategies for exiting the crisis caused by the Covid19 pandemic, according to the position paper by Cassa Depositi e Prestiti together with the CELF Research centre of law firm Orrick and the Polytechnic of Milan.

The study demonstrates how national and European institutions have rightly decided to supplement traditional forms of financing with alternative ways of supplying financial resources, such as basket bonds and minibonds. According to the paper, regardless of the exceptional economic situation in which a country finds itself, providing alternative instruments which complement the banking system, an approach typical of evolved markets, has the potential to support businesses (including those which are performing) in finding medium/long-term finance.

This concept is reinforced by the fact that in those regions with an established Minibond market, whether in Lombardy and Trentino in the north or Puglia and Campania in the south, the economic advantages for the business sector have been evident. Indeed, the research shows that on average the value of Minibond issues represents 32.86% of the turnover of SMEs operating in Central and Northern Italy (and amounts to €4.43 million) while in Southern Italy the average amount of the value of Minibonds represents 27.6% of the entire turnover of issuing companies (and amounts to €2.98 million).

Numbers, tables, graphs, to support the value of alternative finance for Italy’s relaunch through the growth of the entrepreneurial system and the solid possibility of new jobs.