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SG Warburg was not a major distributor of Yankee bonds, but Siegmund Warburg was familiar with the market through his family's relationship with the US investment bank Kuhn, Loeb & Co. His cousins Paul and Felix Warburg were both senior partners at the New York firm and Siegmund himself served as a partner and Executive Director of Kuhn Loeb from 1953 until 1964. As far back as 1958, Warburg had bemoaned the fact that American underwriters were receiving the lion's share of fees on Yankee issues, notwithstanding the fact that most of the distribution was carried out by European banks. In the early 1960s, he and his partners set out to overcome the barriers to launching a Eurobond out of London. The borrower that served as the test case with the British authorities was the builder and owner of Italy's motorway network, Autostrade.ssss1

The reason why Autostrade was chosen traces back to its relationship with the Italian public holding company Istituto per la Ricostruzione Industriale (IRI). IRI had been set up in the 1930s to rescue and restructure companies that had become insolvent during the Great Depression. When a Warburg banker approached IRI with the idea of a Eurodollar financing, it was keen to test out the idea to raise urgently required funds for the Italian steel company Società Finanziaria Siderugica (FINSIDER). However, FINSIDER's statute did not permit it to pay bond coupons without first deducting Italian tax. Such withholding taxes, which were common at the time, would have made the bond unattractive to foreign investors, as they meant investors could be taxed twice on the same coupon: once via the withholding tax; and then again when they declared the income in their country of residence. Double tax treaties were not widespread at the time and, even where taxes could be reclaimed, the process could take months. Autostrade was exempt from all Italian taxes and could pay coupons gross, so FINSIDER's finance director made an arrangement with Autostrade to issue the bond as a front for FINSIDER, presumably for a fee.ssss1