Italy to deploy 20 bln euros in 2021 for fund for virus-hit firms

Kisses From Italy

16/04/2021 12:54

* New recapitalisation fund to be managed by state lender
CDP
    * Will help companies weakened by the coronavirus crisis
    * Italian debt to rise to post-war record of almost 160% of
GDP

    By Giuseppe Fonte
    ROME, April 16 (Reuters) - Italy will supply around 20
billion euros ($24 billion) in firepower in 2021 to a new equity
fund tasked with helping businesses weakened by the pandemic,
the Treasury said.
    The new fund, dubbed "Patrimonio Rilancio", will be 
financed through dedicated debt issues and operate as a special
purpose vehicle managed by state investor Cassa Depositi e
Prestiti (CDP), which is 83% controlled by the Treasury. 
    CDP will use the 20 billion euros in bonds issued by the
Treasury as collateral to raise liquidity on the market.
    The 170-year-old CDP is playing an increasingly active role
in Italy Inc to keep strategic assets in national hands and
mitigate the economic damage caused by the COVID crisis.
    The Treasury has pencilled in 24.5 billion euros in debt
issues linked to Patrimonio Rilancio this year but it will use
part of the money for a different purpose - buying export agency
SACE from CDP, in a deal worth 4.25 billion euros. urn:newsml:reuters.com:*:nL5N2L32LQ
    Bond issues linked to Patrimonio Rilancio will total another
19.5 billion euros in the following two years, the Treasury said
in its Economic and Financial Document (DEF) officially
published on Friday.
    Italy's public debt, proportionally the highest in the euro
zone after Greece, reached a record 155.6% of GDP at the end of
2020 and the DEF forecasts it will climb to 159.8% this year,
the highest level in Italy's post-war history.
     The timing of the bond issuance will hinge on the fund's
capital injection deals, with the size of a first tranche to be
set by a decree the Treasury is drafting, sources have said.
 urn:newsml:reuters.com:*:nL8N2L93LX
    The fund, which has a 12-year time span for its investments,
targets businesses in acute difficulties with revenues of more
than 50 million euros.
    The support will be provided through capital injections,
bonds that convert into shares or subordinated debt, which ranks
below senior debt when it comes to repayment.
    CDP can also use the fund's money to support healthier
companies alongside private investors, as well as buy stakes in
listed companies deemed of strategic importance.   
     ($1 = 0.8352 euros)

 (Reporting by Giuseppe Fonte; editing by Valentina Za and Chizu
Nomiyama)
 ((giuseppe.fonte@thomsonreuters.com; +390680307711;))