Italian Regions' Securitizations at Forefront of European Structured Finance

Italian regional governments are at the forefront of public sector use of structured financing in Europe, according to Standard & Poor’s. Furthermore, Italian regions are among the more fertile areas for issuance growth in the subsovereign asset class. ‘Structured financing can be beneficial to Italian regional administrations’ credit quality when the transaction enables them to increase short-term liquidity, reduce on-balance-sheet debt, and improve efficiency,’ said Public Finance credit analyst Myriam Fernandez de Heredia. ‘The securitization of operating revenues and the use of funds raised for purposes other than debt reduction, however, could have a negative impact on regional ratings because it reduces financial flexibility. In extreme cases, structured transactions can even increase the cost of direct debt.’

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