Healthcare ABS: Italian regions’ ill-health exposed

The revelation that rescheduled long-term debt with implied government support contravenes Article 119 of the constitution of the Republic of Italy – which states that local public entities are allowed to incur debt only if the debt is to finance investments – invalidates the principle of delegazion de pagamento (payment delegation). This concept, whereby the regional government becomes the direct obligor of the receivable which is then rescheduled, has been the basis on which securitization has papered over the cracks in the decentralization of healthcare provision in Italy [see S&P knocks Italian regionals, Euromoney October 2006].

As previously reported, Standard & Poor’s last year highlighted the plight of the local healthcare suppliers in the regions of Campania, Abruzzo and Lazio, which routinely face protracted delays before getting paid out of central government remittances. The agency affirmed Campania before Christmas and downgraded Abruzzo but the jury is still out on...