Mini bond: the opportunity for Italian investors
Mini bonds have established themselves as an increasingly widespread financing tool among small and medium-sized Italian enterprises (SMEs) not listed in the stock exchange. Introduced in 2012 with the "Decreto Sviluppo" (D.L. 83/2012), mini bonds represent an alternative to traditional banking credit, allowing them to finance growth projects, extraordinary investments or refinancing operations. But what are the advantages for Italian investors who choose to bet on these financial instruments?
To answer this question, a thorough analysis was conducted, consulting Italian financial websites, specialized journals, governmental institutions and current legislation. This research process has allowed you to collect detailed and reliable information about mini bonds and their advantages for investors.
Diversification of the Wallet
One of the main advantages for investors is the ability to diversify its portfolio. The mini bonds, being issued by SMEs operating in a variety of sectors, allow to reduce the overall risk of the portfolio, flanking bond instruments to yield to dividend investment.
Potentially Elevate yields
Investing in mini bonds can offer potentially higher returns than other low-risk financial instruments, such as state securities. This is because SMEs, to attract investors, tend to offer higher interest rates than those applied by large companies or government broadcasters. On average, interest rates on mini bonds are between 6% and 7%, with deadlines ranging from 4 to 5 years.
In addition, the mini bonds offer stable loans, with agreed duration and refunds prior to placement and unchangeable at the discretion of the investor. This represents a significant advantage over banking loans, which may be subject to unexpected changes.
For example, a retail investor investing 100,000 euros in a mini bond of a company with a fixed coupon of 8% per year for two years, will get 8,000 euros of interest each year. At the expiry of the mini bond, will receive back the initial capital of 100,000 euros, for a total gross profit of 16.000 euros 6.
Support for Italian SMEs
Investing in mini bonds, investors directly contribute to the financing and growth of Italian SMEs, a crucial sector for the country's economy 10. This type of investment can generate a positive impact not only on the performance of its portfolio, but also on the real economy.
According to a study, if all potential enterprises in South Italy financed through the issue of mini bonds, they could obtain additional resources of €11.8 billion. Projecting the data collected on companies already broadcasters, it is estimated a growth of the turnover for these companies pairs to 2,7 billion euros annual and the creation of 1.680 jobs in 3 years.
Access to Capital Market
Mini bonds, often listed on regulated markets such as ExtraMOT PRO of Borsa Italiana, offer investors the opportunity to access the capital market with lower investment thresholds than normal bonds. This also allows small investors to participate in the financing of SMEs.
ExtraMOT PRO is a market segment of Borsa Italiana dedicated to trading alternative financial instruments to banking loans, such as mini bonds, financial exchanges and other debt securities 6. The listing on ExtraMOT PRO offers several advantages, including:
- Visibility: SMEs that share their mini bonds on ExtraMOT PRO acquire greater market visibility.
- Transparency: The quotation requires SMEs to adopt higher transparency and governance standards.
- Liquidity: Investors can trade the mini bonds listed on ExtraMOT PRO, offering greater liquidity to investment.
Liquidity
Although mini bonds have traditionally been considered illiquid instruments, listing on regulated markets such as ExtraMOT PRO offers investors the opportunity to liquidate their investments before the natural expiry of the title.
In addition, mini bonds offer a particularly advantageous dynamic from the liquidity point of view, allowing investors to regain invested money and future coupons before the title expires.
Regulation and Taxation
The Italian regulatory framework encourages investment in mini bonds. The "Decreto Sviluppo" (D.L. 83/2012) 1 has introduced measures to facilitate SME access to the capital market, eliminating the limits to the issue of bonds provided for in Article 2412 of the Civil Code for unlisted companies.
The "Decreto Sviluppo Bis" (D.L. 179/2012) has introduced additional tax incentives for broadcasters, including deductibility of liabilities.
"Decreto Destination Italia" (D.L. 145/2013) has extended to mini bonds the application of the replacement tax of 0.25%, replacing the stamp, register, mortgage and cadastral tax.
The "Competitive Decree" (D.L. 91/2014) has eliminated the agreement on interest and proceeds of unquoted bonds in multilateral trading systems, provided they are signed by institutional investors.
In addition, mini bonds are not reported at the Rischi Central, which represents an advantage for investors as it does not affect their credit rating.
Crowdfunding Platforms
The advent of crowdfunding platforms has simplified access to investment in mini bonds. These platforms, like CrowdFundMe 6, carry out an accurate assessment of the creditworthiness of issuers, offering investors a further level of security.
Put option
Frequently, mini bonds offer investors the possibility of exercising the put option, or the right to sell securities at a certain price within a certain date. This option offers greater flexibility and protection to the investor.
Risks
It is important to stress that investment in mini bonds, like any investment, involves risks. The main risks are:
- Credit risk: The risk that the issuer is unable to repay the capital or pay interest.
- Interest rate risk: The risk that the value of the mini bond decreases due to an increase in interest rates.
- Risk of liquidity: The risk of failing to sell the mini bond quickly in case of need.
For this reason, it is essential to carefully assess the creditworthiness of the issuer before investing.
Conclusions
The investment in mini bond offers many advantages for Italian investors, including portfolio diversification, potentially high returns, support for Italian SMEs and access to the capital market. However, it is essential to carefully assess the risks associated with this type of investment and rely on crowdfunding platforms or qualified financial consultants to make informed choices.
Examples of Success
The mini bond market in Italy has seen several successful cases. For example, Comal S.p. A. has issued mini bonds to finance its growth and its investments, offering investors interesting opportunities of return. Other examples include Ambrogio Trasporti and LMM Logistics, which used mini bonds to support sustainable growth and innovation in intermodal transport and integrated logistics. Finally, Caar S.p. a. , a Turin company operating in the automotive, aerospace and railways sector, issued mini bonds to finance its development plans.
Summary
Advantage | Description |
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Portfolio diversification | Mini bonds reduce overall portfolio risk. |
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Potentially high yields | SMEs offer higher interest rates than other broadcasters. |
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Support for Italian SMEs | They contribute to the financing and growth of SMEs. |
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Access to the capital market | Lower investment thresholds than normal bonds. |
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Liquidity | Possibility of liquidating the investment before the expiry. |
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Tax relief | Deducibility of interest and disapplication of the acceptance tax for institutional investors. |
|
crowdfunding platforms | They simplify investment access and offer greater security. |
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Put option | Right to sell titles at a certain price within a certain date. |
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In summary, mini bonds represent ainvestment opportunities interesting for Italian investors, offering the possibility to diversify the portfolio, obtain potentially high returns and support the growth of Italian SMEs. However, it is essential to carefully assess the risks associated with this type of investment, in particular the risk of credit and the risk of liquidity. Before investing in mini bonds, it is advisable to conduct an adequate two diligence on the issuer company, analyzing its balance sheets, its business plan and its credit rating. Using crowdfunding platforms or consulting financial experts can help investors make informed and aware decisions.
Bibliography
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