Missing Investors in the Italian Corporate Bond Market

Abstract

We study the allocation of Italian corporate bonds among investors using a unique dataset that matches, for each security, information on the holding sectors with those of the bond and the issuer. Our main findings are the following: i) large companies issue bonds mainly on international markets, whereas smaller firms mainly target domestic markets; ii) in Italy, differently than in economies with more developed bond markets, the role of domestic institutional investors is limited, especially for SMEs’ securities, while domestic households hold larger shares of these issues; iii) Italian households hold bonds of financially sounder firms, whereas foreign investors concentrate their holdings in riskier ones; for the other Italian investors we do not find evidence of a significant risk taking attitude. Even if in recent years institutional investors have significantly increased their holdings of Italian SMEs bonds, our findings suggest that the development of this market is still hampered by the limited presence of intermediaries specialized in the subscription of financial instruments issued by smaller, unlisted and riskier firms.