Italian cheese maker 4 Madonne Caseificio dell’Emilia has sold mini-bonds backed by Parmesan cheese as collateral, showing how prime food can be a safe guarantee for alternative financing.
The dairy cooperative is one of few companies in Italy issuing bonds backed by the renown Parmigiano Reggiano cheese. Credito Emiliano, the primary bank of Italy’s northern gastronomic region Emilia Romagna, pioneered in food-backed financing in 1953, helping local parmesan cheese and Parma ham producers rebuild their business in the wake of World War II.
But the long recession of the past three years has dented the economy and the credit system, prompting firms to seek alternative funding sources guaranteed by their best assets.
The mini-bonds guaranteed by wedges of Parmesan allowed cooperative firm 4 Madonne Caseificio dell’Emilia to raise 6 million euros. The bonds will mature in January 2022 and until then will pay a six-month coupon with a 5% fixed yield rate.
Founded in 1967 near the city of Modena, the cooperative firm makes around 72,000 Parmigiano wedges every year. In a regulatory filing, the cheese maker said it intends to use the funds in line with its strategic plan, increasing productive capacity, and extending the maturation cycle of its products, therefore increasing margins. The cooperative firm also said it wants to expand abroad, and in particular in the United States where demand for Italian food is growing.
By Antonella Ciancio
