SRT investors are now observing credit event definitions similar to the unlikely to pay (UTP) events of the Italian SRT market following two years of record demand and issuance. UTP events are triggered following the booking of losses and provisions and do raise a complication for investors. The key challenge for buyers is that historical data does not necessarily capture UTP credit events. Lawyers stress the difference between stage two exposures and UTP. Milan-based White & Case local partner Francesco Scebba told RTRA Intelligence: "There's a difference between stage two and UTP. Stage two just means that the debt is still paying or is 'in bonis' but the debtor's creditworthiness is deteriorating. UTP on the other hand is classified as distressed under Italian law, although no payment default has occurred yet but can improve with intervention."
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