Finance, Accounting & Control Case Study

Italian Corporate Bonds: Bella Figura to Buconero

OR

Abstract:
In the late 1990s, when Italy was preparing to abandon its volatile lira for the more solid euro, many Italian companies reduced bank financing and increased debenture financing, while at the same time investors seeking higher yields switched from short-term government notes to unrated corporate bonds. A number of well-known names, including the fashion house Versace, had bonds becoming due in 2004.

Pedagogical Objectives:

• To discuss the evolution and transformation of the Italian capital markets and also how the corporate bonds, which were bella figura, turned into buconero
• To discuss how the lack of corporate governance led to the befooling of Italian retail investors.

Keywords : Italian corporate bonds, The Cirio Group, Investment grade bonds, Non-rated bond issues, Finance Case Study, Restructuring, Parmalat, Raimondi - Lettieri motion, Bankruptcy, Special purpose vehicles (SPVs), Finmatica SPA, Convertible bonds, Liquidity, Collateral debt obligation, Italian industrial and financial system, The Bretton Woods system