ITALY – PensPlan Invest SGR, the asset management firm set up within the PensPlan project – the group of schemes in Italy’s border region of Trentino-Alto Aldige/ South Tyrol – has launched a regional fund investing in ‘minibonds’, corporate bonds issued by small and medium-sized enterprises (SMEs).

Minibonds were created last October by the previous Italian government to give SMEs an alternative source of finance as bank lending dries up.

Generally, they enjoy the same tax treatment as debt issued by listed companies, including tax relief on interest costs and issuance expenses.

In addition, there are relatively few, and simplified, regulatory requirements for issuing the debt instruments.

In February, the first minibonds were listed on the ExtraMOT segment of the Italian bourse, the market set up for this type of security.

The Euregio Minibond Fund, advised by the local Prader Bank, will invest in the Trentino-Alto Adige/South Tyrol region.

Industry sectors include technology, agribusiness, and high-quality, innovative mechanical production.  

Michele Guerrieri, head of sales and business development at PensPlan Invest SGR, said: “Before the rules changed, the cost of issuing small amounts of bonds – say, from €2m to €5m – was very expensive for SMEs, and tax-inefficient for investors.

“Now it has become cheap enough to make the financing competitive.

“In terms of interest rates, however, it’s not whether issuing paper will be 50 basis points cheaper for an SME than taking out a bank loan.

“But it gives companies more choice in finding finance, and also allows them to spread the cost.”

The global target for the fund is €100m, and PensPlan is “very confident” of reaching this.

The target investable universe consists of around 500 companies.

There will be between 40 and 50 holdings, each worth an average €2m-3m.

The average maturity of the debt will be 6-7 years.

Guerrieri said the new fund would give investors more opportunities to diversify their bond portfolios, offering higher yields at slightly higher risk.

“If you invest in, say, emerging markets or in others a long way from the region, such as the Philippines, you’ve no idea what you’re investing in,” he said.

“The fund will allow investors to tap into local companies they know better.”
The fund’s target yield to maturity is between 4% and 4.75%, net of ongoing charges.

“This should represent an attractive return in a very low interest rate context, with a manageable and acceptable level of risk,” Guerrieri said.

“However, the default rate in Trentino-Alto Altige/South Tyrol is the lowest in Italy.”

The fund is an Italian closed fund reserved for qualified investors.

The minimum investment is €250,000, and there will be a 24-month first subscription period.

Meanwhile, PensPlan’s Local Investment Fund has achieved an average annualised return of 3.8% since launch in November 2011, compared with 3.84% for its benchmark.

The fund, a sub-fund within the PensPlan Sicav Lux incorporated in Luxembourg, invests in fixed and floating-rate government and corporate debt.

It currently invests up to 50% of its assets in the economy of the Trentino-Alto Adige/South Tyrol region in Italy, via time deposits with local banks, bonds issued by local companies and its first unlisted equity investment, carried out last year.

The fund is now worth €24m and has about 10 institutional investors.