A new €243 million ($320 million) collateralized bond obligation pool open to French regional not-for-profit hospitals began marketing last week.

The deal, Centres Hospitaliers Regionaux Universitaires No.1, is being arranged by Calyon and Natixis

Moody's Investors Service assigned an 'Aaa' rating to the offering. It is the sixth transaction of the kind rated by Moody's; the four previous transactions are the "Communautes Urbaines de France" issuances and the fifth is "Collectivites Territoriales de France No1".

The obligations are issued jointly by 24 French public hospitals (23 Centres Hospitaliers Universitaires and Centre Hospitalier Regional (CHR-Us)). Each entity is a stand-alone regional hospital with legal autonomy.

The 'Aaa' provisional rating assigned to the bond issue is based on the weighted average expected losses associated with all the issuers. Because none of the 24 issuers have a Moody's public rating, the rating agency has assigned a credit estimate to each issuer.

The CHR-Us' credit quality benefits from a strong institutional and regulatory framework and the embedded high probability of intervention from the central government should one of these hospitals face severe financial distress.

"Moody's assessment results from the strategic role of the CHR-Us in France and the reputation risk for the central government and other key public establishments in the country in case of a default by a CHR-U," said Sebastien Hay, a vice president-senior credit officer in Moody's International public finance group. 

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