According to the New York manager, who recently visited the Milan offices of his company, net of your historical problems related to bureaucracy and the efficiency of the legal system, the beautiful country has more than a good number to play. If the bible of financial newspapers recalls the primary surplus and the low private debt (public debt, we know, enormous) to underline the potential that today would make our fragility less dangerous than the British one, Muzinich focuses, in addition to the size of the private wealth (almost 5 trillion, over ten thousand with real estate; how many other countries can boast similar numbers?), also in terms of flexibility, entrepreneurial mentality and ability to follow changes.
Quality which, for an institutional investor focused on small and medium-sized Italian companies, is very important. And Muzinich, with respectable numbers in our country. The savings management boutique, which he founded in 1988 in New York, has been active in Italy since 2014. Ten of the 50 billion assets under management refer here, making Italy the first global home market, which has 14 offices in the United States, Europe and Asia. In June 2018 he joined Muzinich’s team Fabrizio Paganiwho was head of the technical secretariat of the Ministry of the Treasury, and who is now senior advisor to the company, led in Italy by Domenico Del Borrello.
Muzinich specializes in a single asset class: the corporate bond sector. With tailor-made mandates and 11 funds, distributed through banking partnerships, but also with consolidated experience in the field of private debt. What does it mean? We finance small businesses that offer a guarantee of being able to create diversified economies and employment opportunities in their communities with an additional share compared to that obtained through banking channels, explains Muzinich. Over 100 managers and analysts handle it.
The first private debt fund in Italy dates back to 2011-2012, during the difficult season of the BTP crisis. A form of participation, that of private debt, which does not provide seats on the boards of directors (as is the case with private equity and venture capital), but which in any case requires careful expertise of the candidates. We avoid, for example, gaming, leisure but also tourist services without a historical and consolidated presence, he explains again. But which companies do you choose? They must have three basic characteristics: good business, good management and a convincing financial structure, says Muzinich. Which does not mention names, but lists some made in Italy sectors in which to look for opportunities: packaging, pharmaceuticals, fashion, food.
The three unknowns
What do you think of the three major problems I have, inflation, war and the energy crisis? We are witnessing a series of irrational behaviors, says Muzinich referring to the geopolitical order of the world shaken by conflict and in search of new equilibriums. As regards inflation, however, it is necessary to enter the order of ideas that we come from an exceptional period of zero interest rates and that this is a time of transition towards greater normality. The cost of living will stabilize, at lower than current levels. But it won’t drop below the 2% that central banks deem desirable, Muzinich says.
A higher cost of living and rates much higher than those we were used to will encourage less speculation: on the markets there is less risk if the money is no longer free. Do you see corporate defaults intensifying in the future? I do not believe. Many companies managed to refinance themselves at very low rates immediately after the pandemic. So the number of those with water in their throats should still be under control. For the funds of the house, the defense of capital is a founding feature. In 33 years of activity, its portfolios have offered one of the lowest levels of default among asset management specializing in corporate bonds (0.13% annualized versus 3.32%, market average).
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