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<blockquote data-quote="halftime" data-source="post: 31568" data-attributes="member: 3041"><p>Hi – I’m not sure if you are familiar with securitisation but I think it is pretty key to understanding this story. I’m certainly no expert but my understanding of the answers to your questions would be as follows:</p><p></p><p>The mafia group are involved with the bonds through their connection to companies providing some of the underlying assets backing the bonds. The bonds in this instance are asset-backed securities – i.e. securities which pay out from a pool of underlying assets. In this particular case the underlying assets are accounts receivables – money owed to various companies by the Italian public health authorities for providing medical services (though I can understand why you might interpret it as being the other way around from reading the FT article). The controversial issue here is that some of the receivables which make up the portfolio of assets backing the bonds have been provided by companies which are actually front companies being used by the mafia group for illegal activities. To be clear, the mafia group do not own the bonds.</p><p></p><p>With regard to payment, the bonds are paid by a special purpose vehicle (SPV) which holds the underlying assets and issues the bonds. Put simply, as the underlying unpaid invoices are settled by the Italian public health authorities, this cash flows through the SPV and is paid to the bondholders.</p><p></p><p>Hopefully I have explained it a little better but if not feel free to drop me a message!</p></blockquote><p></p>
[QUOTE="halftime, post: 31568, member: 3041"] Hi – I’m not sure if you are familiar with securitisation but I think it is pretty key to understanding this story. I’m certainly no expert but my understanding of the answers to your questions would be as follows: The mafia group are involved with the bonds through their connection to companies providing some of the underlying assets backing the bonds. The bonds in this instance are asset-backed securities – i.e. securities which pay out from a pool of underlying assets. In this particular case the underlying assets are accounts receivables – money owed to various companies by the Italian public health authorities for providing medical services (though I can understand why you might interpret it as being the other way around from reading the FT article). The controversial issue here is that some of the receivables which make up the portfolio of assets backing the bonds have been provided by companies which are actually front companies being used by the mafia group for illegal activities. To be clear, the mafia group do not own the bonds. With regard to payment, the bonds are paid by a special purpose vehicle (SPV) which holds the underlying assets and issues the bonds. Put simply, as the underlying unpaid invoices are settled by the Italian public health authorities, this cash flows through the SPV and is paid to the bondholders. Hopefully I have explained it a little better but if not feel free to drop me a message! [/QUOTE]
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