French public hospitals

Financing an essential sector benefitting from strong credit fundamentals

514m€ of investments as of 31/12/2022
63 transactions – 32 hospitals

Key investment parameters
Weighted average life(1):
10.8 years
Weighted average rating(2):
A1

(1) as of investment date
(2) based on Rivage Investment’s internal credit ratings as of 12/31/2022

Since the launch of the public sector debt platform, Rivage Investment invested €514m in French public hospitals.

A total of 63 trades were made, involving 57 loans and 32 hospitals. Out of these investments, almost half were made on the primary market.

Hospitals in our portfolio range from small public hospitals (with a number of beds ranging between 250 and 350), medium-size and large public hospitals and very large university hospitals (centres hospitaliers universitaires) with a number of beds in excess of 1,500 beds.

When investing, we focus on the relative value of the investment given the credit worthiness and strategic importance of the relevant hospital.

Investment rationale

  • A solid institutional framework justifying an A or AA implied rating
  • Implicit guarantee from the French State (Aa2/AA)
  • Attractive pick-up vs. sovereign debt with low regulatory capital consumption
  • An essential sector: the French public hospital sector deals with 87% of hospital stays after visits to emergency rooms and 80% of complex care
  • Investment with strong social impact
Key investment parameters
Weighted average life(1):
10.8 years
Weighted average rating(2):
A1

(1) as of investment date
(2) based on Rivage Investment’s internal credit ratings as of 12/31/2022

Examples of investments

CHRU de Nancy

 

Type of borrower: public health establishment
Number of beds: 1688 (as of 10/17/22)

 

The CHRU of Nancy is based in the Meurthe-et-Moselle department (Grand Est region). It is a university hospital, which means that it is affiliated with a medical school and combines the services of a hospital with the education of medical students and with medical research. The CHRU is also the support establishment of the GHT (territorial hospital group) Sud Lorraine, which is composed of 11 public health establishments – including 2 psychiatric hospitals – serving the south of Lorraine.

The CHRU’s main activities are medicine (1005 beds) and surgery (455 beds). Other activities include gynecology and obstetrics, as well as medium and long-term care.

Deal description:

Private placement (bond) arranged on the primary market in 2018.

Executive summary:

Initial investment: €15.0 m
Initial WAL: 16.6 years
Internal credit rating: initially rated A3 but was upgraded to A2 in 2020 and then A1 in 2021
Public rating: AA- (Fitch)

CH de Cannes

 

Type of borrower: public health establishment
Number of beds: 934 (as of 10/28/22)

 

The Cannes hospital is the second largest public hospital in the eastern part of the Provence-Alpes-Côte d’Azur (PACA) region, after the Nice University Hospital (CHU Nice, 1,800 beds).

The CH’s main activities are medicine (296 beds), surgery (83 beds) and psychiatry (101 beds). Other activities include gynecology and obstetrics, medium and long-term care and retirement homes.

Deal description:

Bilateral loan acquired in 2021 on the secondary market.

Executive summary:

Initial investment: €9.4 m
Initial WAL: 9.6 years
Internal credit rating: initially rated AA3 but was subsequently downgraded to A1

CH de Douai

 

Type of borrower: public health establishment
Number of beds: 833 (as of 12/01/2021)

 

The CH Douai is a medium-size hospital based in the Nord department (Hauts-de-France region). It is the support establishment of the GHT (territorial hospital group) of Douai, which comprises 2 public health establishments.

The CH’s main activities are medicine (596 beds), long-term care (252 beds) and psychiatry (35 beds).

Deal description:

1 private placement (bond) arranged on the primary market and 2 bilateral loans acquired on the secondary market in 2022.

Executive summary:

Initial investment: €49.3 m
Initial WAL: 6.7 years
Internal credit rating: A1

We invest in a diversified range of public sector debt