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Fitch Affirms Hospital Centre of Roubaix at 'A'; Outlook Stable
November 29, 2016 / 5:05 PM / in a year

Fitch Affirms Hospital Centre of Roubaix at 'A'; Outlook Stable

(The following statement was released by the rating agency) PARIS, November 29 (Fitch) Fitch Ratings has affirmed the Hospital Centre of Roubaix's (CH Roubaix) Long-Term Foreign and Local Currency Issuer Default Ratings (IDR) at 'A' with Stable Outlooks and Short-Term Foreign Currency IDR at 'F1'. KEY RATING DRIVERS Fitch rates CH Roubaix on a top-down basis as it is classified as a credit-linked entity under its public-sector entity criteria. This is due to its status as a public hospital establishment (PHE), and its direct supervision of Hauts-de-France regional health agency (ARS; a state body). CH of Roubaix is rated three notches below its sponsor (the French state; AA/Stable/F1+) because while it is an important hospital, it does not have the strategically significant status of a university hospital. As a PHE, Fitch expects that CH Roubaix would benefit from very strong state support in case of need. The French government does not explicitly guarantee CH Roubaix's debt, but Fitch assumes that the state would be willing to provide timely support in case of need. By virtue of its status, the assets and liabilities of CH Roubaix cannot be liquidated or transferred to entities other than the French state. Moreover, as a PHE, debt of CH Roubaix is included in social security debt, which is accounted as general government debt under the Maastricht Treaty. Fitch views CH Roubaix's links with the French state as strong, due to the hospital's inclusion in the general government accounts and the state's role in financing. CH Roubaix's revenues are highly dependent on the state's decisions on tariff-setting and on general grants to finance the entity's public health responsibilities. Although CH Roubaix is not subject to the approval by ARS for its new borrowing, Fitch believes that the state's financial supervision helps prevent potential budgetary tension. In view of the safeguards, the rating difference of three notches from the sponsor acts as an appropriate rating floor for CH Roubaix. The hospital is of strategic importance to the state for the provision of health-care services in its territory. It represents the second-largest PHE for emergency patient admissions after the regional university hospital centre of Lille, and belongs to a regional group of hospitals, which allows the efficient organisation of medical services. Due to efficiency measures, Fitch expects CH Roubaix's management to achieve its objective of a gross margin of 7.45% in 2020 (compared with 5.65% at end-2015) with a consolidated positive net result of EUR3.3m (compared with a slight negative net result of EUR0.6m at end-2015). For 2016, Fitch expects CH Roubaix's gross self-financing capacity (SFC; EUR12.7m) will continue to be sufficient to cover debt repayment of EUR3m. CH Roubaix is undertaking an important project with the construction of a mother-and-child unit and an intensive-care unit on the same site for a capacity of 127 beds at a total cost of EUR53m. The project benefits from strong financial support from the state. Fitch believes that the project will reinforce the position of CH Roubaix within its territory and allow for some efficiency gains. We expect long-term debt to total EUR52.8m in 2020 (EUR48.5m at end-2015), representing 3.2 years of cash flow, which we view as acceptable. Fitch estimates that the debt structure is manageable. CH Roubaix benefits from predictable cash flow as its main treasury inflows from the state are set by law. In 2016, the treasury of CH Roubaix was structurally positive with a surplus of EUR7.8m in September 2016. RATING SENSITIVITIES A downgrade would most likely follow a downgrade of the sovereign rating. An upgrade would most likely result from an upgrade of the sovereign or a change in CH of Roubaix's status to a regional university hospital, which Fitch views as unlikely at present. Contact: Primary Analyst Arnaud Dura Director +33 1 44 29 91 79 Fitch France S.A.S. 60, rue de Monceau 75008 Paris Secondary Analyst Pierre Charpentier Analyst +33 1 44 29 91 45 Committee Chairperson Guido Bach Senior Director +49 69 768076 111 Media Relations: Francoise Alos, Paris, Tel: +33 1 44 29 91 22, Email:; Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: Additional information is available on Applicable Criteria International Local and Regional Governments Rating Criteria - Outside the United States (pub. 18 Apr 2016) here Rating of Public-Sector Entities - Outside the United States (pub. 22 Feb 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1015466 Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. 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All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. 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Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. 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