Hampered by low interest rates the Italian market saw investors moving away from capital protected products in 2021.
Some 2,364 structured products worth and estimated €11.7 billion were issued in Italy between 1 January and 31 December 2021 – a 15% decrease by sales volumes compared to the previous year (FY2020: €13.7 billion from 1,868 products).
Traditionally Italy is seen as a conservative country where investors want and expect a certain level of capital protection. However, due to the historic low and sometimes even negative interest rates in 2021, many issuers struggled to create interesting capital protected structures, which meant there was a real shift towards riskier products during the year.
Capital-at-risk products (excluding flow- and leverage products) claimed a 72% share of the Italian market in 2021, up from 45% the prior year.
There were 2,246 such products issued during the year, selling a combined €8.4 billion – an average of €3.8m per product – compared to 1,672 products worth €6.2 billion in 2020 (€3.7m per product). The average maturity was three-years, slightly higher than in 2020 (2.6-years).
The main issuers of capital-at-risk products were BNP Paribas, Unicredit, Mediobanca, Leonteq, Vontobel and Société Générale.
Products with full capital protection, which in 2020 captured 50% of all sales volumes, saw their market share decrease to a meagre 12.8% in 2021.
The 39 products offering 100% capital protection had sales of €1.5 billion compared to €6.9 billion from 116 products (€59m per product) the previous year. The average maturity was 6.9-years (2020: 6.1-years). However, average ticket sizes for capital protected structures, at €38m per product in 2021, where still well above the average for capital-at-risk structures.
Unicredit was the main provider, issuing 19 products worth €422m, including Obbligazione Social Floater con Cap & Floor, which was the best-selling product of the year in Italy with sales of €155m. The 10-year bond offers a quarterly coupon equal to the 3-month Euribor plus 0.35%, subject to a minimum of 0.65% and a maximum of 2%.
Other providers of 100% protected structures included Intesa Sanpaolo (€380m from five products), Banco BPM (€667m from eight products), and Banco Akros (€100m from two products).
Forty-eight products (€1.1 billion) protected at least 90% of the nominal invested (2020: €575m from 67 products) while a further 31 products (€611m) protected between 24 and 87% of the capital (2020: €92m from 13 products).
Disclaimer: data refers to public distribution products only.