Cassa depositi e prestiti (CDP) will spend up to Eu3bn to purchase Italian residential mortgage backed covered bonds and other similar securities as part of a programme aimed at supporting the country’s residential real estate market, it announced on Thursday.

CDP headquarters, Rome

The government-owned agency is launching a “Plafond Casa” platform to stimulate residential mortgage lending, for which Eu2bn has been earmarked, and in connection with this Eu3bn has been allocated to purchases of obbligazioni bancarie garantite (OBG) issuance and other securities of a similar nature, according to an Italian-language statement released on Thursday in association with the Italian Banking Association (ABI).

CDP was not able to provide further information about the platform by the time of publication.

A banker familiar with the initiative likened it to covered bond purchase programmes previously conducted by the European Central Bank (ECB). In 2009 the ECB launched a Eu60bn covered bond purchase programme (CBPP1), which supported a reopening of the market after the financial crisis, and in 2011 it launched a second programme, CBPP2, for Eu40bn.

The banker said that the Italian initiative will enable CDP to act as a lead or anchor investor in OBG issues launched on the public primary market, and would support Italian covered bond issuance by removing execution risk.

He said it would not be a “game changer”, noting that several Italian banks have already been able to access the benchmark market this year, but nonetheless welcomed the initiative as adding certainty.

It could facilitate issuance by second and third tier issuers by encouraging them to be “braver” and act more quickly, he said, but would also be useful for national champions by serving as a sort of buffer in times of volatility.

According to UniCredit analysts there are some Eu47bn of benchmark OBGs outstanding, making Italy the fifth largest benchmark covered bond market. Benchmark OBG issues totalling Eu8.75bn have been launched so far this year, including debuts for Banca Popolare dell’Emilia Romagna and Mediobanca.

The announcement of the CDP programme comes after several proposals to revive the Italian residential mortgage market were touted this year, including multi-issuer OBG issuance with CDP acting as an anchor investor.

See here and here for previous coverage of these proposals or select Italy from the country drop-down menu in the right hand column.