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Italy’s SME Minibond Revolution: Can Small Businesses Really Access the Bond Market?
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What Italy’s Minibond Market Could Teach Malaysia About Financing Growing SMEs
Imagine a Malaysian manufacturing SME that has grown steadily over the past decade. The company now wants to raise RM20 million to install a new production line, automate its operations and expand into regional markets.
Bank financing may still be the most practical option. However, as the company grows, relying entirely on bank borrowing may not suit every funding requirement. The business may want longer term financing, a broader group of funders or another source of capital alongside its existing banking relationships.
This is relevant in Malaysia because bank financing remains the dominant source of SME funding. According to Bank Negara Malaysia, banking institutions provide more than 90% of total SME financing. As at end February 2026, outstanding SME financing stood at RM440.5 billion, representing about 51% of total business financing.
Malaysia has also developed alternative channels through Equity Crowdfunding, Peer to Peer financing, venture capital, private equity, the LEAP Market and the ACE Market. At a later stage of growth, larger companies may eventually consider bonds and sukuk.
But what happens to companies that have outgrown smaller financing channels while remaining too small for conventional corporate bond issuance?
Italy faced a similar challenge and developed an interesting solution: the minibond market.
Why Italy Developed Minibonds
Italy has a large population of smaller businesses that traditionally relied heavily on bank financing.
Following periods of tighter bank credit, policymakers sought to broaden the financing options available to smaller and mainly unlisted companies. Reforms associated with Decree Law No. 83/2012, commonly known as the Decreto Sviluppo, helped make it easier for these companies to issue debt securities.
Borsa Italiana subsequently launched ExtraMOT PRO in 2013 as a professional market segment for debt instruments issued by listed and unlisted companies. The platform later evolved into Euronext Access Milan.
The idea was simple.
Instead of expecting smaller companies to access the bond market in exactly the same way as large corporations, Italy developed a financing ecosystem better suited to smaller transaction sizes and professional investors.
What Is a Minibond?
A minibond is fundamentally a corporate debt instrument.
A company raises money from investors and agrees to repay the principal according to agreed terms, normally together with coupon payments.
According to the Minibond Observatory at Politecnico di Milano, the market it monitors covers debt securities and commercial paper issued by Italian companies where the value of an individual placement is below €50 million.
These instruments are generally targeted at professional and qualified investors rather than the wider retail market.
Professional investors may include asset managers, insurance companies, pension funds, private credit investors, banks and other institutions with the resources to assess corporate credit risk.
This is important because the Italian model did not try to make every SME suitable for retail investors. Instead, it created a specialised market where professional investors could evaluate smaller corporate borrowers.
A minibond also does not necessarily replace bank financing.
A company could continue using bank facilities for working capital while raising additional debt from investors for expansion or another longer term funding requirement.
Has the Italian Model Worked?
According to the 12th Italian Minibond Report, published by the Entrepreneurship Finance and Innovation Observatory at Politecnico di Milano in March 2026, the Italian market recorded 214 minibond issuances worth approximately €2.01 billion in 2025.
SMEs accounted for 146 issuances worth approximately €1.08 billion, giving an average SME issuance size of around €7.4 million.
The report recorded 196 issuing companies during the year, of which 132, or 67%, were SMEs. It also identified 131 companies entering the market for the first time.
Over the longer period covered by the Observatory, 1,468 Italian companies had accessed the minibond market, including 951 SMEs.
These figures demonstrate that debt capital market financing does not necessarily need to begin with transactions worth hundreds of millions.
For the right business, financing of several million euros can still attract professional capital when an appropriate market structure exists.
Guarantees and Basket Bonds Help Address SME Constraints
Allowing SMEs to issue debt is only part of the challenge. Investors must also be willing to take the credit risk.
Smaller companies may have shorter financial track records and less publicly available information than major listed corporations. Italy has partly addressed this through credit guarantees and other forms of credit enhancement.
According to the 2026 Minibond Report, only around 31% of minibonds issued in 2025 were without guarantees. The majority therefore benefited from some form of guarantee or collateral support.
A guarantee does not remove credit risk, but it can reduce part of the investor’s exposure and make smaller issuers more attractive to institutional capital.
Italy has also developed the basket bond concept to address the problem of small transaction sizes.
Consider ten Malaysian SMEs that each want to raise RM5 million. Individually, each financing requirement may be too small to justify the time and cost required by a large institutional investor.
However, if the financing requirements were organised within a RM50 million programme, the overall opportunity could become more attractive.
That is broadly the logic of basket bonds. Several individual SME debt transactions are brought together within a wider financing programme, creating greater scale.
Politecnico di Milano reported more than €300 million of new basket bond operations during 2025.
For Malaysia, this is particularly relevant because an SME may be financially viable but still require too little financing to attract institutional investors efficiently.
Malaysia Already Has a Funding Escalator
Malaysia is not starting from zero.
Malaysia already offers several capital market channels for growing businesses.
In 2023, MSMEs and mid tier companies raised RM6.3 billion through channels including the ACE Market, LEAP Market, venture capital, private equity, Equity Crowdfunding and Peer to Peer financing.
Under the Securities Commission Malaysia’s Catalysing MSME and MTC Access to the Capital Market: 5 Year Roadmap, the target is to increase MSME and mid tier company fundraising through the capital market to RM40 billion by 2028.
The Roadmap focuses on regulatory and product innovation, market infrastructure and capacity building.
Malaysia has continued developing these channels. In May 2026, the Securities Commission Malaysia and Bursa Malaysia proposed LEAP Market 2.0 enhancements aimed at improving fundraising access for MSMEs and mid tier companies through more flexible admission pathways, streamlined disclosure requirements and broader investor participation.
This means Malaysia already has alternatives to bank financing.
The more interesting question is whether there is room for another stage between alternative financing platforms and the conventional corporate bond and sukuk market.
Where Could the Italian Model Fit in Malaysia?
Malaysia does not need to copy Italy’s minibond structure exactly.
The two markets have different regulatory frameworks, financial systems and investor structures.
Malaysia also has an important advantage: a highly developed Islamic capital market.
This creates the possibility of exploring smaller institutional bond or sukuk structures for companies that have become too large for early stage financing but remain too small for conventional corporate issuance.
For example, a Malaysian medium sized manufacturer seeking RM20 million or RM30 million for expansion might eventually benefit from an institutional sukuk structure if transaction costs, investor demand and regulatory requirements made the financing practical.
Pooling could also be explored.
Instead of expecting an investor to analyse one RM5 million SME sukuk, several qualifying issuers could potentially be brought together within a larger financing programme.
Any Malaysian structure would still need to comply with the Securities Commission Malaysia’s regulatory framework, disclosure standards, investor protection requirements and Shariah requirements where applicable.
The key lesson from Italy is therefore not the exact product.
It is the idea of creating financing structures that better match the size and maturity of growing businesses.
Could Credit Enhancement Support Malaysian SMEs?
Malaysia already has experience with credit guarantees.
Credit Guarantee Corporation Malaysia provides guarantee schemes that support financing obtained by MSMEs from participating financial institutions.
Malaysia also previously had Danajamin Nasional, whose business and undertakings were transferred to Bank Pembangunan Malaysia Berhad in March 2023.
The Italian experience raises a useful question for Malaysia: could an appropriate future guarantee or credit enhancement mechanism support institutional SME bonds or sukuk?
Such a mechanism would not replace proper credit assessment.
However, it could reduce part of the risk faced by investors and potentially improve the ability of qualifying SMEs to attract institutional capital.
Why Malaysia Cannot Simply Copy Italy
There are several practical challenges.
Small issuances can be expensive relative to the amount raised. Legal work, documentation, due diligence, credit assessment, ongoing reporting and Shariah advisory where applicable all create costs.
Institutional investors also require transactions large enough to justify the resources needed to assess and monitor them.
Liquidity may also be limited because SME bonds or sukuk may trade less frequently than securities issued by larger corporations.
Credit assessment is another important issue. Investors must be able to distinguish financially strong companies from businesses that are not ready for capital market borrowing.
This means that simply introducing a product called a minibond would not automatically create a successful market.
A functioning ecosystem would require suitable issuers, professional investors, advisers, appropriate regulation, credible credit assessment and potentially guarantee or aggregation mechanisms.
The Opportunity for Malaysia
Malaysia’s MSMEs are economically significant.
According to the Securities Commission Malaysia, MSMEs represent 96.9% of businesses in Malaysia.
At the same time, bank financing will remain essential.
The purpose of creating more capital market solutions should therefore not be to replace banks. It should be to give successful companies more financing choices as they grow.
A business could begin with bank financing, move into Equity Crowdfunding or Peer to Peer financing, attract venture capital or private equity, access the LEAP Market or ACE Market where appropriate and eventually consider institutional bonds or sukuk.
Italy’s minibond experience shows that the gap between SME financing and conventional corporate debt does not have to remain empty.
For Malaysia, the key question may therefore not be whether SMEs should immediately start issuing bonds or sukuk.
The question is whether Malaysia can eventually develop a practical institutional financing market for companies that have outgrown traditional SME financing but remain too small for conventional corporate bond or sukuk issuance.
Italy suggests that such a market can develop when smaller issuance sizes are supported by professional investors, proportionate regulation, credit enhancement and aggregation.
Malaysia already has many of the surrounding components.
The next step is to determine whether these components can eventually be connected to create a clearer pathway from SME borrower to capital market issuer.
Imagine a Malaysian manufacturing SME that has grown steadily over the past decade. The company now wants to raise RM20 million to install a new production line, automate its operations and expand into regional markets.
Bank financing may still be the most practical option. However, as the company grows, relying entirely on bank borrowing may not suit every funding requirement. The business may want longer term financing, a broader group of funders or another source of capital alongside its existing banking relationships.
This is relevant in Malaysia because bank financing remains the dominant source of SME funding. According to Bank Negara Malaysia, banking institutions provide more than 90% of total SME financing. As at end February 2026, outstanding SME financing stood at RM440.5 billion, representing about 51% of total business financing.
Malaysia has also developed alternative channels through Equity Crowdfunding, Peer to Peer financing, venture capital, private equity, the LEAP Market and the ACE Market. At a later stage of growth, larger companies may eventually consider bonds and sukuk.
But what happens to companies that have outgrown smaller financing channels while remaining too small for conventional corporate bond issuance?
Italy faced a similar challenge and developed an interesting solution: the minibond market.
Why Italy Developed Minibonds
Italy has a large population of smaller businesses that traditionally relied heavily on bank financing.
Following periods of tighter bank credit, policymakers sought to broaden the financing options available to smaller and mainly unlisted companies. Reforms associated with Decree Law No. 83/2012, commonly known as the Decreto Sviluppo, helped make it easier for these companies to issue debt securities.
Borsa Italiana subsequently launched ExtraMOT PRO in 2013 as a professional market segment for debt instruments issued by listed and unlisted companies. The platform later evolved into Euronext Access Milan.
The idea was simple.
Instead of expecting smaller companies to access the bond market in exactly the same way as large corporations, Italy developed a financing ecosystem better suited to smaller transaction sizes and professional investors.
What Is a Minibond?
A minibond is fundamentally a corporate debt instrument.
A company raises money from investors and agrees to repay the principal according to agreed terms, normally together with coupon payments.
According to the Minibond Observatory at Politecnico di Milano, the market it monitors covers debt securities and commercial paper issued by Italian companies where the value of an individual placement is below €50 million.
These instruments are generally targeted at professional and qualified investors rather than the wider retail market.
Professional investors may include asset managers, insurance companies, pension funds, private credit investors, banks and other institutions with the resources to assess corporate credit risk.
This is important because the Italian model did not try to make every SME suitable for retail investors. Instead, it created a specialised market where professional investors could evaluate smaller corporate borrowers.
A minibond also does not necessarily replace bank financing.
A company could continue using bank facilities for working capital while raising additional debt from investors for expansion or another longer term funding requirement.
Has the Italian Model Worked?
According to the 12th Italian Minibond Report, published by the Entrepreneurship Finance and Innovation Observatory at Politecnico di Milano in March 2026, the Italian market recorded 214 minibond issuances worth approximately €2.01 billion in 2025.
SMEs accounted for 146 issuances worth approximately €1.08 billion, giving an average SME issuance size of around €7.4 million.
The report recorded 196 issuing companies during the year, of which 132, or 67%, were SMEs. It also identified 131 companies entering the market for the first time.
Over the longer period covered by the Observatory, 1,468 Italian companies had accessed the minibond market, including 951 SMEs.
These figures demonstrate that debt capital market financing does not necessarily need to begin with transactions worth hundreds of millions.
For the right business, financing of several million euros can still attract professional capital when an appropriate market structure exists.
Guarantees and Basket Bonds Help Address SME Constraints
Allowing SMEs to issue debt is only part of the challenge. Investors must also be willing to take the credit risk.
Smaller companies may have shorter financial track records and less publicly available information than major listed corporations. Italy has partly addressed this through credit guarantees and other forms of credit enhancement.
According to the 2026 Minibond Report, only around 31% of minibonds issued in 2025 were without guarantees. The majority therefore benefited from some form of guarantee or collateral support.
A guarantee does not remove credit risk, but it can reduce part of the investor’s exposure and make smaller issuers more attractive to institutional capital.
Italy has also developed the basket bond concept to address the problem of small transaction sizes.
Consider ten Malaysian SMEs that each want to raise RM5 million. Individually, each financing requirement may be too small to justify the time and cost required by a large institutional investor.
However, if the financing requirements were organised within a RM50 million programme, the overall opportunity could become more attractive.
That is broadly the logic of basket bonds. Several individual SME debt transactions are brought together within a wider financing programme, creating greater scale.
Politecnico di Milano reported more than €300 million of new basket bond operations during 2025.
For Malaysia, this is particularly relevant because an SME may be financially viable but still require too little financing to attract institutional investors efficiently.
Malaysia Already Has a Funding Escalator
Malaysia is not starting from zero.
Malaysia already offers several capital market channels for growing businesses.
In 2023, MSMEs and mid tier companies raised RM6.3 billion through channels including the ACE Market, LEAP Market, venture capital, private equity, Equity Crowdfunding and Peer to Peer financing.
Under the Securities Commission Malaysia’s Catalysing MSME and MTC Access to the Capital Market: 5 Year Roadmap, the target is to increase MSME and mid tier company fundraising through the capital market to RM40 billion by 2028.
The Roadmap focuses on regulatory and product innovation, market infrastructure and capacity building.
Malaysia has continued developing these channels. In May 2026, the Securities Commission Malaysia and Bursa Malaysia proposed LEAP Market 2.0 enhancements aimed at improving fundraising access for MSMEs and mid tier companies through more flexible admission pathways, streamlined disclosure requirements and broader investor participation.
This means Malaysia already has alternatives to bank financing.
The more interesting question is whether there is room for another stage between alternative financing platforms and the conventional corporate bond and sukuk market.
Where Could the Italian Model Fit in Malaysia?
Malaysia does not need to copy Italy’s minibond structure exactly.
The two markets have different regulatory frameworks, financial systems and investor structures.
Malaysia also has an important advantage: a highly developed Islamic capital market.
This creates the possibility of exploring smaller institutional bond or sukuk structures for companies that have become too large for early stage financing but remain too small for conventional corporate issuance.
For example, a Malaysian medium sized manufacturer seeking RM20 million or RM30 million for expansion might eventually benefit from an institutional sukuk structure if transaction costs, investor demand and regulatory requirements made the financing practical.
Pooling could also be explored.
Instead of expecting an investor to analyse one RM5 million SME sukuk, several qualifying issuers could potentially be brought together within a larger financing programme.
Any Malaysian structure would still need to comply with the Securities Commission Malaysia’s regulatory framework, disclosure standards, investor protection requirements and Shariah requirements where applicable.
The key lesson from Italy is therefore not the exact product.
It is the idea of creating financing structures that better match the size and maturity of growing businesses.
Could Credit Enhancement Support Malaysian SMEs?
Malaysia already has experience with credit guarantees.
Credit Guarantee Corporation Malaysia provides guarantee schemes that support financing obtained by MSMEs from participating financial institutions.
Malaysia also previously had Danajamin Nasional, whose business and undertakings were transferred to Bank Pembangunan Malaysia Berhad in March 2023.
The Italian experience raises a useful question for Malaysia: could an appropriate future guarantee or credit enhancement mechanism support institutional SME bonds or sukuk?
Such a mechanism would not replace proper credit assessment.
However, it could reduce part of the risk faced by investors and potentially improve the ability of qualifying SMEs to attract institutional capital.
Why Malaysia Cannot Simply Copy Italy
There are several practical challenges.
Small issuances can be expensive relative to the amount raised. Legal work, documentation, due diligence, credit assessment, ongoing reporting and Shariah advisory where applicable all create costs.
Institutional investors also require transactions large enough to justify the resources needed to assess and monitor them.
Liquidity may also be limited because SME bonds or sukuk may trade less frequently than securities issued by larger corporations.
Credit assessment is another important issue. Investors must be able to distinguish financially strong companies from businesses that are not ready for capital market borrowing.
This means that simply introducing a product called a minibond would not automatically create a successful market.
A functioning ecosystem would require suitable issuers, professional investors, advisers, appropriate regulation, credible credit assessment and potentially guarantee or aggregation mechanisms.
The Opportunity for Malaysia
Malaysia’s MSMEs are economically significant.
According to the Securities Commission Malaysia, MSMEs represent 96.9% of businesses in Malaysia.
At the same time, bank financing will remain essential.
The purpose of creating more capital market solutions should therefore not be to replace banks. It should be to give successful companies more financing choices as they grow.
A business could begin with bank financing, move into Equity Crowdfunding or Peer to Peer financing, attract venture capital or private equity, access the LEAP Market or ACE Market where appropriate and eventually consider institutional bonds or sukuk.
Italy’s minibond experience shows that the gap between SME financing and conventional corporate debt does not have to remain empty.
For Malaysia, the key question may therefore not be whether SMEs should immediately start issuing bonds or sukuk.
The question is whether Malaysia can eventually develop a practical institutional financing market for companies that have outgrown traditional SME financing but remain too small for conventional corporate bond or sukuk issuance.
Italy suggests that such a market can develop when smaller issuance sizes are supported by professional investors, proportionate regulation, credit enhancement and aggregation.
Malaysia already has many of the surrounding components.
The next step is to determine whether these components can eventually be connected to create a clearer pathway from SME borrower to capital market issuer.
Sources and References
Bank Negara Malaysia, Financing for Small and Medium Enterprises, Statistics and Baseline Indicators.
Politecnico di Milano, Entrepreneurship Finance and Innovation Observatory, 12° Report italiano sui Minibond, March 2026.
Borsa Italiana, Borsa Italiana Launches ExtraMOT PRO, March 2013.
Euronext, How to List Bonds on Euronext Access Milan.
Securities Commission Malaysia, Catalysing MSME and MTC Access to the Capital Market: 5 Year Roadmap, 2024 to 2028.
Securities Commission Malaysia and Bursa Malaysia, Public Consultation Paper: LEAP Market 2.0 Proposed Enhancements, 18 May 2026.
Securities Commission Malaysia, Opening Address at the SIDC Business Foresight Forum 2024: Investing in MSMEs for Impact, 22 August 2024.
Credit Guarantee Corporation Malaysia Berhad, MSME Guarantee Schemes and Developmental Facilities.
Bank Pembangunan Malaysia Berhad, Bank Pembangunan Completes Merger with Danajamin, 21 March 2023.
Bank Negara Malaysia, Financing for Small and Medium Enterprises, Statistics and Baseline Indicators.
Politecnico di Milano, Entrepreneurship Finance and Innovation Observatory, 12° Report italiano sui Minibond, March 2026.
Borsa Italiana, Borsa Italiana Launches ExtraMOT PRO, March 2013.
Euronext, How to List Bonds on Euronext Access Milan.
Securities Commission Malaysia, Catalysing MSME and MTC Access to the Capital Market: 5 Year Roadmap, 2024 to 2028.
Securities Commission Malaysia and Bursa Malaysia, Public Consultation Paper: LEAP Market 2.0 Proposed Enhancements, 18 May 2026.
Securities Commission Malaysia, Opening Address at the SIDC Business Foresight Forum 2024: Investing in MSMEs for Impact, 22 August 2024.
Credit Guarantee Corporation Malaysia Berhad, MSME Guarantee Schemes and Developmental Facilities.
Bank Pembangunan Malaysia Berhad, Bank Pembangunan Completes Merger with Danajamin, 21 March 2023.
Disclaimer
This report has been prepared and issued by Bond and Sukuk Information Platform Sdn Bhd (“the Company”). The information provided in this report is of a general nature and has been prepared for information purposes only. It is not intended to constitute research or as advice for any investor. The information in this report is not and should not be construed or considered as an offer, recommendation or solicitation for investments. Investors are advised to make their own independent evaluation of the information contained in this report, consider their own individual investment objectives, financial situation and particular needs and should seek appropriate personalised financial advice from a qualified professional to suit individual circumstances and risk profile.
The information contained in this report is prepared from data believed to be correct and reliable at the time of issuance of this report. While every effort is made to ensure the information is up-to-date and correct, the Company does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information contained in this report and accordingly, neither the Company nor any of its affiliates nor its related persons shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof.
The information contained in this report is prepared from data believed to be correct and reliable at the time of issuance of this report. While every effort is made to ensure the information is up-to-date and correct, the Company does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information contained in this report and accordingly, neither the Company nor any of its affiliates nor its related persons shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof.
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