Business loans down 50% in 15 yearsStructured finance and private debt instruments offered by Phinance Partners
Milano Finanza – Report on Financing Growth
Thursday, June 19, 2025
Among the most relevant economic issues in the European public debate is the financing of the various sectors in which Europe is being asked to invest, primarily the energy transition and military spending. But Europe has invested little in its own economic growth for many years, and has done so in a haphazard manner, making already scarce resources inefficient. The result is that European productivity is declining in global economic comparisons, and one figure illustrates this well: while 15 years ago the US and Eurozone economies were essentially equivalent, today the US economy is worth almost double that of Europe. And in Italy, with its economy stagnating for years, the situation is even more complex.
Phinance Partners SpA—an independent firm offering strategic consulting in structured finance and alternative private debt, public debt, tax credits, and special situations in real estate (i.e., the purchase of properties in complex situations that prevent their sale on the regular market)—has analyzed this scenario, seeking to understand where the resources could be found to finance Europe’s growth and restart the economy. “Today in Italy, bank loans to businesses account for 30% of GDP, compared to 55% in 2010. Alternative or supplementary financing channels are needed, and one option is the public capital market, although it is hampered by several factors,” explains Enrico Cantarelli, founder and managing partner of Phinance Partners SpA.
First, there is the lack of a European capital market, which fragments access to pan-European capital. Second, there is the relatively smaller size of European corporates compared to US ones. Large companies already obtain financing easily on global markets, but those who struggle are SMEs, which are the backbone of the European economy and even more so of the Italian one. One of the responses this system has generated has been mini-bonds, with the paradox that many are subscribed by banks, which could have simply provided financing to the company. And even when they are subscribed by funds, since there is no real market, they are reduced to buy-and-hold, thus completely ineffective for the development of a real capital market.
Finally, they are not even functional for attracting international investors, as their risk-return-illiquidity ratio makes them unsuitable compared to other opportunities available to investors.
The real answer to the need for capital could be private debt, and specifically the opportunities offered by structured finance (securitizations and similar instruments), which allows private capital to reach the real economy. Indeed, there are numerous opportunities to finance the real economy through securitization, leveraging companies’ reliable cash flows. In these cases, the investing fund can be supported by the bank as a senior lender, minimizing capital absorption.
A massive example of this type of intervention was seen during Covid with loans to SMEs guaranteed by the central fund. These transactions saw the bank act as a senior investor, financing the fund-guaranteed portion at a low cost, while the fund invested in the junior portion, offering more attractive returns. However, there is a need to mobilize Italian investors in this asset class—currently reluctant to consider transactions of this type—and part of the solution lies in regulation.
The European Commission is currently conducting a consultation on the future of the European securitization market, which in Europe is only a quarter of the size of the American market. Among the solutions under discussion is a change to the rules governing insurance company investments, known as Solvency II, which imposes a very high capital requirement on securitization. This has resulted in a share of capital invested in securitization by European life insurers of 0.33%, compared to 17% for American insurers. There are numerous possible measures that Europe could implement to free up resources for the real economy. But it is important and urgent to get started, and it is hoped that the European Commission itself will provide new input—and regulatory tools—capable of supporting investment and revitalizing the European economy,” concludes Cantarelli. (All rights reserved)