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CDP is operating as a specialised lender to the public sector in Italy since 1850. Going forward, public-sector lending will remain the core business of the company with the new infrastructure lending activity expected to increase only marginally in future years.
CDP plays a key role in financing Italian public-sector entities, being the main provider of loans to small-medium sized local authorities in Italy. As a State-controlled entity with a public interest mission, CDP is the natural lending counterparty for public sector entities. More
While underwriting and credit approvals are performed on the basis of legal eligibility criteria rather than credit analysis, the quality of CDP's public sector loan portfolio is extremely high due to the low-risk profile of the borrowers with no debt defaults experienced in the past.
Creditworthiness of Italian sub-sovereign governments (Regions, Provinces and Municipalities) is supported by strict debt issuance and repayment provisions under the Italian Law relating to those entities. More
Italian Local Authorities may not be declared bankrupt. A special procedure exists (the so-called "dissesto finanziario
") for a Local Authority in serious financial distress providing for the appointment of an administrator by the Central Government to oversee the process of financial recovery. Italian Regions do not benefit from the "dissesto finanziario
" procedure, but the Italian State is likely to support Regions because of the social impact of the services they provide (e.g. healthcare). In any case, debt restructuring with payment delays is the most likely scenario.
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