Italy: Italian State Guarantee For NPL Securitisations: Implementing Decree Is Approved

Decree of the Ministry of Economy and Finance containing implementing provisions (the "Implementing Decree") for State guarantees for securitisations of non-performing loans (Garanzia Statale sulla Cartolarizzazione delle Sofferenze) ("GACS") was approved on 3 August 2016. The GACS was first introduced by Article 13 of Decree no. 18 of 14 February 2016, as amended and converted by Article 1, paragraph 1 of Law no. 49 of 8 April 2016 (the "February Decree").

In this Finance Law Alert we describe the main provisions contained in the new Implementing Decree.


Article 2 of the Implementing Decree describes the features that the securitisation transaction must have in order to be eligible for a GACS. The purchase price for the receivables to be transferred to an Italian securitisation vehicle (the SPV) must be no higher than the aggregate gross value (net of any adjustments and gross of any collections received between the cut-off date and the transfer date), as evidenced by the transferring entity (the Transferor) based on its accounting records. In addition, the receivables being securitised must have been classified and reported as non-performing (in sofferenza) on a date prior to their transfer date.


Article 3 of the Implementing Decree specifies that the senior-ranking notes to be guaranteed (the Senior Notes) must not be subordinated (in a post-default or post-acceleration scenario) as to principal or interest in accordance with the applicable priority of payments to any other non-guaranteed classes of the same issue. We note that Article 7 of the February Decree already specifies that the Senior Notes may not be subordinated pre-enforcement or pre-acceleration. Article 3 also specifies that the GACS may be issued for the benefit of one or more tranches of Senior Notes issued under the same securitisation transaction.


Article 4 of the Implementing Decree describes in greater detail the operation of the order of priority of payments, making it clear that the recoveries and collections deriving from the portfolio and received by the SPV will be used for the payment of amounts due to the noteholders and other costs or expenses associated with the transaction.

Article 4 further clarifies that following the occurrence of an event requiring the application of the postenforcement priority of payments or, where applicable, the post-acceleration priority of payments as specified in the terms and conditions of the notes and the transaction documents, there may not be payments ranking higher in priority to the senior Notes other than those provided for in Article 7 of the February Decree.


Article 5 concerns the eligibility conditions for the GACS. In particular, the terms and conditions of the notes and the transaction documents must provide that:

  1. the failure to pay interest on the Senior Notes and the enforcement of the guarantee do not trigger an acceleration of payments due by the SPV;
  2. the following amendments cannot be made without the express consent of the Ministry of Economy and Finance (the MEF):
    1. amendment of the nominal or principal amount of the Senior Notes;
    2. increase of the interest rate applicable to the Senior Notes or, if interest on the Mezzanine Notes ranks senior to repayment of principal of the Senior Notes, the Mezzanine Notes;
    3. amendment of the maturity date of the Senior Notes;
    4. amendment of trigger events, being the events which entitle the holders of the Senior Notes to accelerate payments due by the SPV or apply the post-acceleration or post enforcement payment priorities;
    5. any amendment of the terms and conditions of the notes and the transaction documents which causes a downgrading of the Senior Notes;
    6. any amendment of the terms and conditions of the notes and the transaction documents regarding how the GACS is enforced, as described in Article 11 of the February Decree;
  1. data on the performance of portfolio and the transaction is periodically sent in electronic format to CONSAP S.p.A. (CONSAP) and the independent entity (nominated by the MEF) (the Independent Entity).

In addition, the rating agencies rating the Senior Notes must be provided with the following information:

  1. the expected cash flows, including cash flows related to any hedging contracts;
  2. the fees due to the servicer (being the entity in charge of collecting the receivables);
  3. the method of payment of interest on the notes;
  4. the consideration paid for the guarantee;
  5. any other costs of the securitisation;
  6. the sizing of the classes of notes other than the Senior Notes;
  7. information, both quantitative and qualitative, on the servicer;

Finally, the Transferor must ensure that all information necessary for assessing that the guarantee has been issued in compliance with the required criteria are provided to the Independent Entity.


Article 6 specifies that in the case of multi-originator securitisation transactions where there is more than one Transferor, the request for a GACS must be made jointly by all the Transferors.


Article 7 contains the procedure for the submission of the application for a GACS. In particular, Transferors must send to the MEF and CONSAP, by certified e-mail (pec), their application using the form published on the MEF and CONSAP websites, accompanied by the following documentation:

  1. the prospectus of the securitisation and ISIN codes of the Senior Notes to be guaranteed;
  2. the terms and conditions of the notes and the transaction documents;
  3. documents confirming the issue of the credit ratings (eg. new issue report, pre-report or similar);
  4. calculation of the cost of the guarantee, as determined on a date falling not earlier than the 15th business day prior to the date of application;
  5. undertaking letter from the Transferor(s) (signed by the legal representative) agreeing to transmit promptly documents evidencing the subscription/transfer of the junior notes and mezzanine notes (if any), in order to achieve derecognition of the portfolio for accounting purposes, together with appropriate certification of the Transferor's auditors;
  6. undertaking letter from the Transferor(s) (signed by the legal representative) agreeing to communicate, or to procure the communication to CONSAP of any amendment of the terms and conditions of the notes and the transaction documents.

CONSAP will not process any guarantee applications unless submitted as described above. CONSPAP shall process applications, in order of receipt, within 15 working days, evaluating compliance with the requirements and conditions contained in the February Decree and the Implementing Decree. The outcome of application process will be promptly communicated to the MEF in order that it may adopt a decree granting the guarantee (each, a Guarantee Decree).

Of particular relevance is the provision that provides for the transfer of junior notes and (if any) mezzanine notes for the purpose of de-recognition as a condition precedent for the effectiveness of guarantee. This makes it possible to have certainty for the granting of the guarantee (although its effectiveness remains conditional) before the sale of the junior and mezzanine notes.

If the conditions above are not realised within 12 months from the date of the Guarantee Decree, the request must be resubmitted.

Lastly it is provided that CONSAP shall forward to the Independent Entity, for the purposes of art. 3, paragraph 3 of the February Decree, a copy of applications for granting of the guarantee and related materials.


Article 8 addresses the circumstances where the guarantee could be declared ineffective by order of the MEF in accordance with Law No. 241/1990, and taking into account the findings of an investigation to be carried out by CONSAP. The MEF will be entitled to act against the Transferor where the GACS was issued on the basis of statements which were subsequently found to be untrue, inaccurate or incomplete. In the following circumstances, the GACS will be declared void:

  1. where the appointment of the servicer is terminated by the SPV or the noteholders causing a deterioration in the credit rating of the Senior Notes; and
  2. where the terms and conditions of the notes and/or the transaction documents are amended other than in accordance with the provisions of the February Decree and the Implementing Decree.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
21 Nov 2018, Seminar, New York, United States

“Big data” is changing our economy. It has allowed Amazon, Google, Facebook and many others to redesign traditional business models and to create new or improved products and services with greater utility for consumers and often at very little cost.

24 Nov 2018, Speaking Engagement, New York, United States

Each year, the New York Region of IFA hosts a panel and reception at the NYU Law School. This year’s panel will include a discussion of the TCJA international provisions.

27 Nov 2018, Speaking Engagement, New York, United States

Employment Managing Associates, Alexandra Stathpoulos and Alexandra Heifetz are presenting at the University of California, Berkeley School of Law’s FORM+FUND Series.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions