When the transfer took place on 1 October 2010, the Public Sector segment was the largest segment of the portfolio, making up 49.3% with a nominal value of EUR 86.6 billion. By the end of 2015, it had been reduced by 45% to a nominal value of EUR 47.6 billion.
The borrowers and issuers of the securities are state and regional governments, municipalities, public law entities and semi-public companies. European Union member states account for the majority of the portfolio; with a total share of 46%, Italy is by far the largest debtor among them. The sub-portfolio has a large percentage of exposures with very long remaining maturities. Approximately 58% of the nominal value will not mature until after 2030, for example.
Accounting for receivables with a nominal value of EUR 23.9 billion, Italy represents the largest concentration risk in the entire portfolio for FMS-WM. Although many of these exposures are very illiquid and could only be sold early at a substantial loss because of the low margins despite the extremely long maturities, the portfolio managers take every opportunity to wind them up in a way that maximizes value or to reduce risks. Approximately EUR 470 million of securities issued by Italian debtors were sold in 2015, for instance.
In doing so, FMS-WM used a buyback programme operated by the Italian finance ministry for regional bonds to sell securities amounting to EUR 237 million. The extremely illiquid and long-dated securities were sold at a price well above Italian government bonds. A further nominal amount of EUR 100 million was swapped for the same type of risk. This transaction improves interest income and reduces residual risks.