Italian regional governments continue to explore the securitization potential of their debt portfolios and currently, the most securitizable asset is healthcare debt. The latest issue comes from the region of Abruzzo, which earlier this month launched a 337 million ($434 million) securitization, Cartesio Srl Series 2005-1, backed by healthcare receivables via Dexia Capital Markets and Merrill Lynch.

The transaction was originated by FIRA S.p.A, which acquired the receivables from a pool of regional healthcare goods and services providers and transferred the claims to Cartesio at the end of last year. The purchase price was paid to the providers via a bridge loan facility that will be reimbursed with the proceeds of the issuance.

"Structuring these types of deals is straightforward," said one market source. "The first phase of the transaction is the most complicated - it's the main part and full of all the legal and administrative aspects of the deal, as well as the creation of the portfolio - and that can take some time."

Several Italian regions settled their healthcare deficits by reaching settlement with local creditors to spread repayments over several years. These settlements have created a relatively stable, high-grade cashflow ideal for repacking via the capital markets. So far, the regions of Sicily Lazio have both tapped the securitization market. Lazio is expected to follow up with a second deal at some point this year. It's likely that the Abruzzo region will also follow up on it latest debt with a second deal that securitizes claims past the December 2003 cut-off date in its present deal, sources said.

Yet a follow-up to the real estate securitization from the region of Friuli (see ASR 6/14/04) seems less likely, said sources. "I don't think we will see too many of these deals as many regions still face problems with finding a sizeable mass of these assets in their portfolios to make coming to the securitization market worth it," according to one source.

The Italian regions have just finished local elections, which could open the way for new assets to be sourced for securitization purposes. "They are thinking of ways to use this market more efficiently but at the moment what we will see in the public sector pipeline is more of these healthcare receivables securitized," said the source. "There is talk the region of Rome might finalize a real-estate transaction by May as well as a deal from the region of Milan that has been stalled - it's uncertain if they will be ready to come to market at some point this year."

Copyright 2005 Thomson Media Inc. All Rights Reserved.

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