First NPL Securitization to Take Place under Italian Government Guarantee Program

On Thursday, September 22nd, it was reported that Banca Popolare di Bari SCpA will be the first Italian bank to securitize a portfolio of non-performing loans (NPLs) under a new government guarantee program. Under this program, the small cooperative bank will buy state guarantees on the least-risky portions of the security, assuming those notes have an investment grade credit rating.

A recent article in Bloomberg highlights that this deal, being the first of its kind will set the standard for how the Italian government uses this program moving forward. The securitization, made up of 480 million euros ($539 million) of NPLs, will completely remove the bad debt from the bank’s balance sheet.

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