Minibonds have gained ground as a financing instrument for small and medium-sized enterprises (SMEs) in almost all European markets. This article examines the main characteristics and trends of minibond markets in Italy and the rest of Europe, providing a comprehensive overview of the current state of this sector.
Italy: benchmark in the European minibond market
Italy is a reference point for the minibond market in Europe. Borsa Italiana's ExtraMOT PRO platform and Euronext Access Milan are the main listing venues for these securities, with an increasing number of issues by SMEs seeking to diversify their financing sources.
In 2023, Borsa Italiana's ExtraMOT PRO segment continued to support the growth of Italian SMEs through the issuance of minibonds, an alternative financing instrument that has seen over 1,500 issues since 2014. After a record 2022 with 302 issues for a total value of over EUR 1.7 billion, the first quarter of 2023 showed a slowdown, with only 17 issues for a total value of around EUR 110.3 million. Of these, one was listed on the ExtraMOT PRO market. About 50 per cent of the minibonds issued between 2022 and 2023 offered variable-rate coupons, often indexed to Euribor
As of 31 December 2023, 106 securities issued by 80 companies, mainly from the industrial sector, were listed on Euronext Access Milan. During the year, 23 new securities were listed while 22 were delisted. The volume of trades amounted to 28 contracts, with a total value of around EUR 3.4 million, with the average value per contract falling compared to 2022. The market is reserved for institutional investors, who mostly adopt buy-and-hold strategies. The most traded stocks were those of Davis & Morgan, MeglioQuesto and Pro-Gest.
United Kingdom: The Order Book for Retail Bonds (ORB) Experience
In the UK, the London Stock Exchange introduced a dedicated platform for retail bonds, the Order Book for Retail Bonds (ORB), in 2020. This listing also allows small savers to invest in minibonds, with minimum investment amounts starting at £100. However, the Financial Conduct Authority (FCA) has imposed restrictions on investing in speculative minibonds to protect retail investors from potential risks and fraud.
Germany: between disappointments and increasing transparency
The German minibond market had mixed experiences. In particular, the Stuttgart Bondm segment experienced numerous issuer defaults, making the experience disappointing for many investors. However, there are signs of improvement, with increased transparency and information available to investors. The total issuing volume in 2023 reached EUR 284m, with an average interest rate of 8.77%.
In parallel, the market for Schuldscheindarlehen, financial instruments combining characteristics of bonds and bank loans, is highly developed in Germany. Despite a decline in the volume of new issues compared to 2022, this market remains robust, with a total of EUR 16 billion raised in the first three quarters of 2023.
Austria: the success of the Vienna MTF
The Austrian minibond market is characterised by the unregulated Vienna MTF, which is operated by the Vienna Stock Exchange. The simplicity of the listing procedures and the low costs have attracted a large number of issuers, including those from abroad. At the end of 2023, 453 bonds were listed on this market, of which as many as 189 were issued by Italian companies.
France: Euronext and SME markets
In France, minibonds find space in three main markets: Euronext, Euronext Growth and Euronext Access. In order to access these markets, issuers must meet stringent requirements, including balance sheet certification and obtaining a rating from authorised agencies. Retail investors can participate through subscription windows of between three and five weeks.
Spain: the Mercado Alternativo de Renta Fija (Marf)
Since 2013, a market dedicated to SMEs has existed in Spain, the Mercado Alternativo de Renta Fija (Marf). This market allows companies to issue minibonds with a minimum denomination of EUR 100,000, mainly intended for professional investors. At the end of 2023, 67 bonds were listed on Marf, with a total issue size of EUR 13.74 million.
Norway and Poland: growing markets
The Norwegian minibond market is represented by the Nordic Alternative Bond Market (ABM), with a segment also open to retail investors. At the end of 2023, 1,443 minibonds were listed, up from the previous year. In Poland, the minibond market is also growing, with the Catalyst segment of the Warsaw Stock Exchange listing 256 securities by 81 private companies.
Conclusions
The minibond market in Europe continues to expand, with significant differences between countries in terms of regulation, access requirements and issuance methods. While Italy remains a leader in the sector, other markets such as Austria and France are becoming increasingly attractive to SMEs. At the same time, emerging markets such as Norway and Poland are gaining ground, offering new opportunities to investors.
In the context of growing interest in minibonds, it will be crucial for regulators to maintain a balance between promoting these instruments and protecting investors, especially retail investors, from potential financial risks.