Recent changes to Italian securitisation law in the Italian Budget Law for 2021

Italian Law no. 178/2020 published in the Italian Official Gazette on 30 December 2020 (the “Italian Budget Law”), amended certain provisions of the Law 130 of 30 April 1999 (the "Securitisation Law") and provided with further clarifications on existing provisions. The changes to Securitisation Law are aimed at:

1. allowing an Italian securitisation vehicle (“SPV”) to finance the purchase of receivables through  loan financing  (instead of issuing asset-backed notes);
2. extending the segregation regime applicable to the amounts paid by the assigned debtor(s) also to other e amounts received in settlement of the assigned receivables" (comunque ricevute a soddisfacimento dei crediti ceduti);
3. extending the benefits provided by the segregation regime to the rights arising from loans made to the SPV; and
4. clarifying that, in the context of securitisation of non performing exposures, assets (such as real estate and registered movable assets) collateralizing the securitized receivables can be transferred to special purpose companies set up to acquire such  collateral (so called “ReoCos” or “LeasCos”) also through corporate transactions.

The said provisions significantly broaden the spectrum of securitisation transaction models simplifying their structuring as well as certain operational aspects.
 

1. Amendments to article 1 paragraph 1 lett. b) of the Securitisation Law

In particular, paragraph 214 of article 1 of Italian Law no. 178/2020 amended article 1 paragraph 1 lett. b) of the Securitisation Law in order to:

1. introduce the possibility for an Italian SPV to finance the purchase of receivables not only through the issuance of notes, but also through the execution of facility agreements made available by third parties duly authorised to perform lending activity (e.g, banks, financial intermediaries and credit funds authorised to direct lending);
2. extend the benefits provided by the segregation regime to the rights deriving from any facility made available by any third parties to the SPV.

The two above amendments introduce an element of flexibility in the structuring of Italian securitisation transactions since the funding of the SPV through direct lending might simplify the execution process compared to the requirements for the issuance of asset-backed notes.
 
In addition the said provisions would render easier the structuring of bridge financing to an SPV since it is now provided that a bridge lender funding the SPV through a loan has the same legal protections of the noteholders in terms of segregation of assets. .
 

2. Clarifications on article 7.1 paragraph 4 of the Securitisation Law

Paragraph 215 of article 1 of Italian Budget Law provided with further clarifications on article 7.1 paragraph 4 of the Securitisation Law.
Article 7.1 of the Securitisation Law allows, in the context of securitisation transaction of NPLs, the incorporation of ReoCos (or LeasCo in case of securitisation of non performing lease receivables) aimed at acquiring, managing and enhancing real estate assets and registered movable assets which are collateral to the securitised receivables.
The clarification introduced in Securitisation Law  specifies that the transfer of the said assets may also occur as a result of a demerger or other corporate transactions .
The above clarification brings certainty and simplifies the structuring of securitisations having real estate or other registered assets as collateral (e.g. securitisations of non performing financial leasing contracts) since it would enable the originator to transfer all the assets underlying the securitised receivables through inter alia a demerger which, for various technical reasons, might result a preferable route compared to an ordinary sale and purchase transaction.

Avv. Carmelo Raimondo
Avv. Matteo Colavolpe