Minibonds are increasingly used, not only by SMEs

In 2017, total issues of minibonds amounted to 170, showing an increase compared to 2016, when total registered minibonds were 110, according to the 4^th Italian Report on minibonds drawn up by the minibond observatory of the Business School of Management of Politecnico di Milano.

Approximately 147 (86.5%) of total issues in 2017 (which accounted for an equivalent value of € 5.5 billion), and approximately 84% of issues among the total sample (467 issues carried out by the sample companies since November 2012) have a value lower than € 50 million.

In 2017, 137 companies placed minibonds on the Italian market (103 did it since the first issue), showing a significant increase compared to the previous year. The most represented industry is manufacturing (44% of the whole sample).

Despite their original aim, minibonds are starting to attract also larger companies. Issuers in 2017 are almost equally divided between SMEs and non-SMEs: In fact, although they can easily access bank finance, non-SMEs are beginning to appreciate their added value given by their flexibility, for which they are willing to pay a higher price.

Denomination of minibonds issues, however, is still pegged to small values, as approximately 70% of total minibonds issued has a value ranging from 0 to 10 million Euros.

Therefore, there was a significant growth in minibonds in 2017 compared to previous years, as they attracted new issuers and investors, although updates in individual retirement savings plans have barely concerned minibonds so far. Minibonds are therefore increasingly establishing as an alternative financial instrument for Italian businesses, in spite of their contested and discussed implicit cost.

We can now expect minibonds to be more and more used to promote growth strategies, thus expanding their possible uses beyond mere debt rescheduling.