New Financial Contracts for Italian SMEs. Liability of Credit Rating Agency

The SME sector in Italy was hit hard by the global recession of 2008-09, as the whole Italian economy which hasn’t yet recovered the 2008 level of GDP. Small enterprises, which constitute the vast majority of Italian companies, were more affected than medium and large-sized companies. For facing that situation Italian government issued some provisions to improve the general framework conditions for Italian SMEs (Small and Medium enterprises), making administration more responsive to the needs of businesses and improving policies for companies which want aggregate and internationalize theirs activities. Nevertheless, the country’s overall performance of SMEs continues to be below the EU average in terms of exporting internationally and the single market, and access to finance. To cope with this problem Italian legislator has introduced amendments to the law on bonds and financing bills with the aim of facilitating access to direct financing for unlisted companies, especially for SMEs. Until now this new possibilities didn´t have a significant impact on the finances of Italian SMEs, in fact just twenty-six new instruments have been issued, for a total amount of just under €5 billion. So, the new measures have generated a substantial flow of capital. Last regulation on this topic was the “Destinazione Italia” Decree which contains in section 12 the legal framework for Italian corporate bonds, offering tax credit both for issuer and purchaser of mini-bond. Insurance companies and pension funds are now incentivized to purchase corporate bonds as those regulatory impediments that used to prevent them from investing have now been lifted. To purchase these bonds with competitive interest rate issuers should have a good credit rating. Only because of the availability of clear, internationally accepted indicators of the risk of default were investors willing to invest in such securities. This lead to the importance of credit rating, their fairness and about the liability of credit rating agency.