Opportunities in Italy: How alternative lenders navigate the challenges and bank credit contraction
Whilst Italy is not the most straightforward of jurisdictions in which to lend, it offers a wealth of opportunities for private credit investors from the combination of continued banking retrenchment, alongside strong underlying real estate fundamentals.
For alternative lenders willing to devote time and effort to structuring and which have already invested resources to acquire market knowledge and relationships with sponsors, banks and services providers, there is a significant opportunity to achieve attractive risk adjusted returns with a ‘jurisdictional premium’ that is overstated relative to its risk.
The reluctance of international investors to lend in continental Europe’s markets stems from perceptions that these are unsophisticated jurisdictions, dominated by domestic lenders and unfriendly to creditors. For evermore, Italy has been the poster child for such phenomenon, having historically posed considerable challenges in relation to its regulatory frameworks, taxation, and judicial system. To this day, a few recurring criticalities immediately are relevant in the context of Italian private credit: Regulation, Creditor Protections, Debtor Protections and Security. In this white paper, we explore these topics in more detail.
