June 21, 2023 11:03 am

Italian Market Review H1 2023: Debitos to capitalise on shift to smaller secondary activity

  • Debitos strengthens position as reference platform for secondary debt transactions in Italy and Europe.
  • Marketplace hosted 3,000 credit listings worth €1.7 billion over the past six months in Italy
  • Forecasts indicate that secondary market activity will reach around €40 billion in 2023, representing 35% of all NPL activity


Milan – June 21, 2023: Italy’s secondary debt market is experiencing a rapid upswing in activity, as a confluence of macroeconomic, regulatory and investor trends coalesce to increase transactional activity on the Debitos marketplace. We expect these favourable market conditions to gather momentum in the second half of the year and beyond with the Debitos marketplace at the forefront.

In this article, we review H1 2023 secondary debt transaction trends on the Debitos marketplace and analyse the underlying market trends driving activity.


Debitos Marketplace

The Debitos marketplace has published approximately 3,000 credit listings in Italy over the past six months, which collectively represent a Total Gross Book Value (GBV) of approximately €1.7 billion. Before the end of July, listings with a GBV of around €350 million are expected to sell on the Debitos marketplace with an aggregate sales price of approximately €120-180 million. In addition, an unsecured Italian portfolio worth approximately €200 million GBV is also set to conclude via the marketplace this summer.

With the largest number of institutional buyers and sellers, Debitos has cemented its market position as the reference platform not only for Italy but for the entire European market. 12 active sellers have offered loans in the first 6 months in Italy, while the number of active buyers exceeds 1,000.


Secondary Market Catalysts

The closure of the primary market and the expiration of the Guarantee Asset Protection Scheme (GACS) have redirected investors’ focus towards smaller transactions in the secondary market, perfectly aligning with the purpose of the Debitos marketplace.

The stability of the Italian banking system, improved bank profitability, and reduced non-performing loans (NPLs) have also diminished primary market activity, in favour of the secondary market and serving to further strengthen Debitos’ position. For example, banks have benefited from higher interest rates and lower credit losses, which has increased net interest income, and reduced risk-weighted assets (RWA). Improved profitability and lower NPL stock has also improved banks’ ability to provision for a smaller volume of NPLs, further reducing primary market sales.

These factors have supported the decline in non-performing loans (NPLs), with the NPL ratio for Italian banks now at 1%, according to the Bank of Italy, in line with the European average. However, at the same time, the stock of Stage 2 loans, which require lenders to set aside higher provisions, held by Italian banks remains above the EU average. In addition, the expiry of GACS – which was major driver of bank de-rising – has removed the main government guarantee to facilitate banks’ offloading of bad loans, reducing investor demand for primary market transactions.

Furthermore, the Italian government is re-assessing how AMCO, the country’s bad loan management agency, will manage billions of euros in government-backed loans related to the pandemic and energy crisis, in the event of borrower default. The government has paused the Guaranteed Loan Active Management (GLAM) programme, which is designed to support small and medium-sized enterprises (SMEs) by managing banks’ attempts to utilise State guarantees where to do so would jeopardise borrowers’ commercial viability. AMCO manages €36.4 billion in impaired credits and plans to expand its loans under management to include non-performing exposures (NPE) and unlikely-to-pay (UTP) loans. The original intention was to add around €11 billion to AMCO’s assets under management by the end of 2025, according to Fitch Ratings.

Consequently, most Italian market participants have pivoted their attention to the secondary market, particularly in smaller transactions, where Debitos is ideally positioned to support activity.


Growing market share of secondary activity

Banca Ifis research estimates secondary market activity will reach around €40 billion in 2023, representing 35% of all NPL activity. In 2024, secondary activity is currently estimated at €33 billion, based on current pipeline visibility. Between 2015 to 2022, approximately €57 billion GBV of loans have transacted in the Italian secondary NPL market, with an estimated additional €11 billion by the end of 2023, according to Banca Ifis research.

The Debitos marketplace is well-positioned to manage a significant share of the growth in the overall market. As the premier marketplace for secondary debt transactions, Debitos continues to adapt to evolving trends and meet the expanding requirements of its diverse investor base, solidifying its market dominance.

“As the Italian debt market pivots to much higher volumes of small secondary transactions, Debitos will continue to solidify its position as the reference platform for secondary debt transactions in Italy and Europe,” says Timur Peters, founder and CEO of Debitos. “The accelerated growth of the secondary market reflects the maturity of the Italian NPL sector.”


About Debitos

Debitos is the leading loan transaction platform in Europe that enables banks, funds and companies to sell their credit exposures on the market through its open and transparent auction-based online transaction platform.

The platform leverages on the digitalisation of the entire sale process and can reduce the expected disposal timing to 3-8 weeks compared to 3-6 months of the traditional process. Debitos was founded in Frankfurt in 2010 and has since successfully transacted more than 900,000 loans in 16 countries. By now, more than 1,900 investors from all over Europe have registered with Debitos.

This post was written by James Wallace

James Wallace is an editor, journalist, researcher and corporate writer on economics, geopolitics, finance, real estate, private equity, aviation, infrastructure and technology. He co-founded CoStar News in the UK in April 2011, and now works for multiple media organisations and corporations across writing, research, marketing/PR and consulting. He is an aspiring psychologist.


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(Image rights: https://www.istockphoto.com/de/portfolio/Marco_Bonfanti)

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