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Capital Markets

SF market round-up: S&P knocks Italian regionals

Italian regional authorities’ healthcare securitizations are under threat following the ratings of Lazio, Campania and Abruzzo being placed on negative watch by Standard & Poor’s. Threats to the accounting treatment given by Eurostat and also domestic authorities point to the regions’ healthcare securitizations being classed as debt. This gave S&P the jitters over how they would continue to fund their healthcare deficits.

Although S&P is not specifically concerned with the accounting treatment, the rating agency does believe there is a chance that Italian healthcare ABS might be ruled inconsistent with Article 199 of the Italian constitution, which prevents regions funding operations with market transactions.

Lazio is presently rated A–, Campania A– and Abruzzo A by S&P. These regions have the biggest healthcare deficits in Italy. Consequently, all have securitized healthcare receivables that have, over the past two to three years, amounted to between €1 billion and €2 billion. In an aggressive statement S&P said that they might well downgrade anywhere between one to three notches.

This has created a worry for bankers in the sector – Calyon, Credit Suisse and Lehman Brothers have a mandate for Campania scheduled for execution in Q4

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