Italy clears hurdle to buy export agency SACE in $4.8 bln deal

Rome: Italy approved a long-awaited decree needed for the Treasury to buy credit insurance agency SACE from state lender Cassa Depositi e Prestiti (CDP) in a deal expected to be worth around 4.25 billion euros ($4.81 billion).

The Treasury wants to directly control the export agency, given its growing importance in supporting the economy, two sources close to the matter said.

Rome supports SACE by partly sharing its risk exposure, which could potentially hurt public finances over time.

The decree, was signed off by Economy Minister Daniele Franco on Jan. 19, while Foreign Affairs Minister Luigi Di Maio gave his green light on January 22.

SACE’s governance will be in the hands of the Treasury, dealing a blow to Di Maio whose ministry, according to one of the sources, is set to lose control over strategic decisions regarding the export credit.

The bond issuance needed to complete the deal, which will push up Italy’s public debt, has been already factored into the Treasury’s public finance targets published in September.

Italy’s public debt, proportionally the highest in the euro zone after Greece, is forecasted by the Treasury to have ended 2021 below 153.5% of national output and is targeted to fall to 149.4% of GDP in 2022.

As part of the sale, the CDP will first buy SACE’s 76% holding in service provider SIMEST, which is partly owned by a group of Italian banks, for 228.4 million euros, the decree showed.

The deal reverses the divestment made during the 2012 sovereign debt crisis by the technocrat government of Mario Monti, which sold SACE to the CDP for around 6 billion euros.

CDP’s liabilities do not count as public debt even though the Treasury controls it with an 83% stake.

SACE has traditionally offered guarantees and financial support to Italian exporters and also works alongside banks to facilitate companies’ access to credit. This role has grown since Italy’s COVID-19 epidemic broke out in early 2020.

The Treasury also readies a decree allowing SACE to offer guarantees in favour of banks at market terms.