[co-author: Lorenzo Massaro]

1. GREEN DEAL

The Law no. 120 of September 11^th, 2020 -converting, with amendments, Law Decree no. 76 of July 16^th, 2020 (hereinafter, "Simplifications Decree")- containing urgent measures for simplification and digital innovation, was published in Italian Official Gazette (Gazzetta Ufficiale) on September 15^th, 2020.

Pursuant to Article 64 of the Simplifications Decree, SACE S.p.A. (hereinafter, "SACE") may issue guarantees for supporting projects aimed at facilitating the transition to a clean and circular economy, as well as sustainable and intelligent mobility (hereinafter, "SACE Green Guarantee").

The law provisions at hand is a part of a wider and more articulated European regulatory framework which has originated the so-called European Green Deal.

According to the Communication of the European Commission addressed to European Parliament, European Economic and Social Committee and Committee of the Regions, dated December 11^th, 2019 (hereinafter, the "Communication"), the European Green Deal represents " [...] a new growth strategy that aims to transform the EU into a fair and prosperous society, with a modern, resource-efficient and competitive economy where there are no net emissions of greenhouse gases in 2050 and where economic growth is decoupled from resource use [...]".

The Communication also provides for an initial roadmap of key policies and measures to be adopted, from time to time, by European Commission in cooperation with the member states.

In Italy, the 2020 Budgetary Law, i.e. Law no. 160 of December 27^th, 2019 (hereinafter, "Budgetary Law 2020"), regulated those measures aimed at implementing a public investment plan for the development of an Italian Green Deal, in line with the environmental strategy promoted by European Commission.

In particular, Article 1, paragraph 86, of the Budgetary Law 2020 allows the Ministry of Economy and Finance (hereinafter, "MEF") to support, through the issuance of one or more guarantees, also with reference to a portfolio transaction and up to 80% of the financed amount, those projects, also on PPP basis, aimed at implementing the economical sustainability with the final goal to, inter alia, create a clean and circular economy and mitigate the impact on the territory arising from climate changes. In this respect, the Budgetary Law 2020 established, in the MEF's forecast accounting statement, an amount of Euro 4,240 million for the years 2020-2023.

In such regulatory framework contest, Article 64 of the Simplifications Decree is aimed at providing for a simplified mechanism for the issuance by SACE of public guarantees aimed at supporting those projects included within the European Green Deal.

2. ELIGIBLE PROJECTS

In identifying the eligible projects which can benefit from SACE Green Guarantee, Article 64, paragraph 1, of the Simplifications Decree expressly refers to the measures provided under Article 1, paragraph 86, of the Budgetary Law 2020 and the principles expressed in the Communication for the implementation of the European Green Deal.

In line with the above, the eligible projects for SACE Green Guarantee can be divided into the following categories:

1. clean economy, i.e. projects aimed at integrating production cycles with low emission technologies for production of sustainable goods and services including, by way of example:
   1. production, transmission, storage, distribution or use of renewable energies;
   2. energy efficiency improvement;
   3. carbon capture, use and storage technologies, which allow a net reduction in greenhouse gas emissions;
2. circular economy i.e. projects aimed at increasing the efficiency, reduction in use, duration and reparability of natural resources used in industrial production cycles;
3. sustainable and intelligent mobility, i.e. projects aimed at implementing the so-called multimodal mobility, suitable for reducing pollution, also through the development of intelligent traffic management systems made possible by digitisation, which include, by way of example:
   1. projects for transport on rail or waterways instead of road, aimed at reducing CO2 emissions;
   2. projects aimed at promoting the use of alternative fuels and increasing networks and infrastructure to support the use of sustainable vehicles.

An additional instrument for the identification and selection of the eligible projects for SACE Green Guarantee is the so-called European taxonomy of sustainable activities, which provides for a classification, at European level, of economic activities that may be deemed as sustainable from an environmental point of view and, therefore, able to achieve by 2050 the zero emissions goal.

According to European law (i.e., Regulation (EU) no. 2020/852 along with the final report on the "EU Taxonomy" of sustainable economic activities, issued by the Technical Expert Group on Sustainable Finance), the economic activities that may be deemed as sustainable from an environmental point of view are those aimed at implementing one or more of the following environmental and climate goals (without, at the same time, affecting any other such goals): mitigation and/or adaptation of/to climate changes, sustainable use and protection of water and marine resources, transition to the circular economy (also with reference to waste reduction and recycling), prevention and control of pollution and protection of biodiversity and health of eco-systems.

No limitations are expressly provided under the applicable law with respect to the financial transaction potentially eligible to be secured by SACE Green Guarantee; therefore, loans in general, regardless of seniority and duration, appear to be eligible, as well as financial lease agreements, project finance transaction also with respect to a portfolio and/or in a context of public-private partnership transactions.

According to Article 64, paragraph 2, of the Simplifications Decree, preliminary activities aimed at identifying the eligible projects will be carried out by SACE, also taking into account the guidelines that the Italian Interministerial Committee for Economic Planning (hereinafter, "CIPE") may adopt by 28 February of each year.

However, in order to allow the immediate utilization of SACE Green Guarantees, paragraph 7 of Article 64 states that, for 2020 year, such guarantees may be issued even if in lack of the above mentioned CIPE guidelines. Based on the wording used under Article 64, paragraph 1, the issuance of CIPE guidelines does not seem to be qualified as a preliminary (and necessary) condition in order to allow SACE to issue SACE Green Guarantees. Nevertheless, it is noted that, on September 29^th, 2020, CIPE has already approved 2020 guidelines for the issuance of SACE Green Guarantees with respect to those projects included within the European Green Deal.

3. MAIN FEATURES OF SACE GREEN GUARANTEE

The main features of SACE Green Guarantee, as resulting from the applicable laws, may be summarised as follows:

1. SACE Green Guarantee will be issued in form of irrevocable and unconditional guarantee and on first demand basis, up to a maximum amount of 80% of the total commitment;
2. secured obligations consist of the repayment of the loan. In this respect, it is noted that, in lack of a different law provision, such secured obligations may be simultaneously guaranteed by other securities (both real and personal securities);
3. financing transaction exceeding Euro 200 million will be eligible to benefit from SACE Green Guarantees subject to the adoption by MEF of an ad hoc decree, after consulting the Ministry for Economic Development and the Ministry for the Environment, Land and Sea;
4. with respect to 2020 year, SACE Green Guarantees may be issued up to a total amount of Euro 2.500 million; for the following years, SACE Green Guarantees will be granted within the expenditure limits provided, from time to time, by the annual budgetary laws.

According to Article 64, SACE obligations arising from SACE Green Guarantees are, in turn, secured, by Italian State whose guarantees are expressly qualified on first demand basis, without recourse, unconditional and irrevocable (hereinafter, "Green Guarantee of Italian State"). The Green Guarantee of Italian State is aimed at securing the repayment of principal, interests and any other fees (net of commissions received for the same guarantees).

Pursuant to Article 1, paragraph 85, of the Budgetary Law 2020, the amount provided therein for 2020 year, equal to Euro 470 million, is entirely allocated in order to cover the Green Guarantee of Italian State. With respect to the following financial years, such amount shall be determined in accordance with the decrees to be adopted in accordance with Article 1, paragraph 88, fourth sentence, of Budgetary Law 2020.

3.1 MEF-SACE Convention Agreement

Article 64 of the Simplifications Decree provides for the signing of an agreement between the MEF and SACE, subject to approval by CIPE resolution to be adopted by 30 September 2020 (hereinafter, "MEF-SACE Convention Agreement"), aimed at regulating, inter alia, the main obligations of MEF and SACE, and in particular:

1. the modalities for the execution by SACE of the due diligence activities, also with reference to the selection and evaluation of the eligible projects with respect to the compliance of the latter with the final goals set forth under the applicable law;
2. the procedures for the issuance of SACE Green Guarantees;
3. the management of each phase relating to and following the enforcement of SACE Green Guarantees, including the modalities and procedure for the exercise by SACE of its credit rights against the debtor;
4. the enforcement modalities of the Green Guarantee of Italian Sate, including the modalities for the request to the MEF the payment of the indemnities in the amount provided under Article 1, paragraph 85, of the Budgetary Law 2020;
5. indication of the remuneration amounts due by the relevant beneficiaries for the issuance of SACE Green Guarantees; and
6. any other procedures relevant for the issuance of SACE Green Guarantees, including the procedures by which SACE periodically will reports to the MEF (and, in turn, the relevant beneficiaries periodically will report to SACE) on the status of the secured projects.

MEF-SACE Convention Agreement has been approved by CIPE on September 29^th, 2020; however, it is reasonable to deem that, considering the main purpose of the MEF-SACE Convention Agreement (i.e., regulation of MEF and SACE obligations), the latter won’t be disclosed to third parties.

4. PRELIMINARY REMARKS

Taking into account the European regulatory framework, SACE Green Guarantees might be considered an useful instrument in order to implement those projects aimed at ensuring the transition to a clean and circular economy, which is one of the main final goal of the European Green Deal.

From a financial point of view, the issuance of SACE Green Guarantees implies a transfer to SACE of the borrower's credit risk with potential benefits for the lenders, with reference to both the calculation of the capital adequacy ratios, aimed at determining the lender’s exposure to the weighted credit risk, and to the risk capital provisioning obligations set forth under Basel agreements.

The above, together with the possibility of securing significant amounts for medium-long term financing also as an alternative to club deal financing, may represent only some of the main benefits that can arise from SACE Green Guarantees.

However, some aspects relating of the law provisions at issue need to be clarified (also by means of legislative interventions), including:

1. eligible projects: while it seems clear that the financing of greenfield projects, which comply to the applicable law, may benefit from SACE Green Guarantees, it seems dubious that refinancing transaction and, more generally, brownfield projects are eligible for benefitting from SACE Green Guarantees;
2. areas of intervention: it is not clear whether the issuance of SACE Green Guarantees is subject to territoriality limits with reference both to eligible projects and the beneficiaries latu sensu (with evident impact also on the financing transaction which can benefit from SACE Green Guarantees);
3. nature of SACE credit right: in light of the most recent Italian case law (Cass. Civile Sezione III, 13 May 2020, no. 8882), it would be strongly advisable an intervention of the Italian legislator in order to clarify the nature of SACE credit right in case of enforcement of SACE Green Guarantee and, in particular, whether such credit right may be deemed secured ex lege pursuant to Article 9, paragraph 5, of Legislative Decree March 31^st, 1998 no. 123.