Minibond and other financing opportunities: why you should apply for a rating in 2020

Insights 1 July 2020

Claiming that 2020 could be the best year to apply for a rating may raise puzzlement. Despite the economic losses caused by Covid-19?

Yes, indeed.

We'll get to that later. But to understand the reason for this statement, let’s first see what a rating is and what it evaluates.

The rating: what it is and what it evaluates

A rating is a creditworthiness assessment. It evaluates an entity’s ability to meets its financial debts. If the entity is a company, it is called a corporate credit rating.

The process that leads to the issue of the rating consists of two phases; the analysis of quantitative data and the analysis of qualitative and credit history data.

The quantitative analysis ends with the calculation of the credit score. The credit score is a creditworthiness assessment based on balance sheet data aimed at assessing a company's economic-financial equilibrium. The greater the balance between profitability, solvency, and liquidity, the higher the score will be.

Then it follows:

  • the credit history analysis, which evaluates the company's relations with the banking system by evaluating the data provided by the Central Risk Register of the Bank of Italy and the credit information systems (SIC);
  • the analysis of qualitative variables that may influence the company's performance (management capabilities, adverse political situations, unforeseen events, etc.).

Why you should certify your creditworthiness in 2020

Let's take a step back. As we have seen, the credit score is the initial creditworthiness assessment. Qualitative analysis can change the final rating, but the benchmark is given by the result of the quantitative analysis based on the balance sheet data. Which, however, refer to the previous year.

Ratings issued in 2020 will therefore be based on 2019 balance sheet data, before the spread of the Coronavirus epidemic. The effects of the crisis could be detected from the credit history analysis, which provides more up-to-date information on the company's health. But the result of the qualitative and credit history analysis will not drastically affect the final rating assigned to the company.

Once issued, credit ratings are unquestionable. To ascertain your baseline position, you can contact modefinance for a financiability analysis, which provides the creditworthiness assessment assigned to the company according to the result of the quantitative and credit history analysis.

Financing opportunities

The balance sheet time frame is not the only reason to apply for a rating during 2020. A credit rating provides certification of creditworthiness, which financial institutions must take into account when granting credit. But due to the lockdown, several measures have been introduced to facilitate companies' access to credit, including free access to the public guarantee.

Banks are not the only ones providing credit to businesses. Many initiatives come from alternative finance sources, which can provide liquidity to businesses in a very short time. Including the issue of minibonds, through which SMEs can raise up to 500 million euros from qualified investors. In recent months, Consob, the Italian securities market authority, has extended the range of crowdfunding platforms authorized to place minibonds. Moreover, the conversion of the Liquidity Decree into law has extended the possibility of obtaining the SACE guarantee to bond issuer companies that have achieved an investment-grade rating issued by a Credit Rating Agency.

Elite Basket Loan; an opportunity for Italian SMEs

Among the alternative finance initiatives, we would like to mention this opportunity for SMEs based in Piedmont (in the coming months, the project will be extended to other regions): the Basket Loan project launched by Elite, Fisg (Banca Finint) and ADB Corporate Advisory.

Through Elite Basket Loan, SMEs with less than 500 employees and a rating equal to or higher than BB- can obtain financing of a minimum of € 500 thousand to a maximum of € 3.5 million

The project involves the securitization of the loan portfolio, guaranteed by the Italian Guarantee Fund. This instrument allows companies to access an alternative and efficient form of financing, allowing them to obtain liquidity within thirty days. Interested companies can find more information at