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(Bloomberg) — Italy plans to propose a new financial vehicle to mobilize hundreds of billions of euros of private capital for strategic defense and aerospace projects via European Union and member state guarantees.
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The instrument — which Finance Minister Giancarlo Giorgetti plans to present to his euro-area peers over dinner on Monday — could see €16.7 billion ($18.1 billion) of public money leverage as much as €200 billion of private investment over three to five years, according to people familiar with the plans who spoke on the condition of anonymity.
The plan is inspired by InvestEU and its predecessor, the so-called Juncker plan, that aims to leverage the EU budget to attract private funds into risky projects.
The proposal comes as the bloc considers ways to boost its defense spending. Rome wants to avoid options that would increase its national debt level and doesn’t believe that the EU budget alone can provide the needed resources, the people said.
The plan envisions three levels of guarantees:
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One supported by member states to absorb initial risk
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One mezzanine tranche, backed by a limited EU budget effort
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One highly protected senior tranche
A spokesperson for the Italian finance ministry declined to comment on the plans.
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