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Cartesio S.r.l. - Series 2003 - 1
EUR 2,000,000,000 Asset Backed Euro Medium Term Note Programme
Originator:
Primary Obligor:
SAN.IM. S.p.A.
Region of Lazio
Cartesio S.r.l. - Series 2003-1
Table of Contents
1. Overview
2
2. Region of Lazio
5
3. Transaction Structure
12
4. The Originator
14
5. The Portfolio
15
6. The Issuer
18
7. Highlights
19
1. Overview
Overview
Executive Summary

Cartesio S.r.l. - Series 2003 - 1 is a EUR 2,000,000,000 programme of notes backed by lease payments due from the
Region of Lazio

Cartesio issued on the first Issue Date (5 March 2003) four Tranches of Notes in USD, GBP and EUR, totalling
approximately EUR 1,100,000,000 equivalent
 Tranche 1: EUR 200ml, 19.3 years average life, coupon 6 month Euribor + 50 bps, final maturity 7 March 2033

Tranche 2: EUR 200ml, 25 years average life, coupon 6 month Euribor + 57 bps, final maturity 7 March 2028

Tranche 3: US$ 450ml, 30 years average life, fixed rate coupon 6.022%, final maturity 7 March 2033

Tranche 4: GBP 200ml, 25.7 years average life, coupon 6 month Libor + 62bps, final maturity 7 March 2033

All the Notes issued under the programme
 will pay interest on a semi-annnual basis
 will all rank pari passu, and
 are expected to be assigned ratings equal to the ratings of the Region of Lazio (currently Aa3/A+)

The portfolio backing the notes issued is comprised of lease payments arising out of a sale and lease-back
transaction of properties entered into between SAN.IM, as lessor and certain healthcare entities, based in the Region
of Lazio, as lessees

The Region of Lazio (Aa3/A+), as a result of a payment delegation mechanism, has agreed to pay the lease
instalments on behalf of the healthcare entities and is therefore the primary obligor of the Notes to be issued under
the programme

The benefit of the payment delegation will survive any early termination of the lease contracts
2
Overview
Executive Summary


The Region of Lazio has established itself as a frequent borrower in the European capital markets and was the first
European local authority to access the securitisation markets, through Cartesio S.r.l - Series 2001-2, which issued
two tranches of notes

Tranche 1 EUR 250,000,000, due in August 2002, which has been fully reimbursed, and

Tranche 2 EUR 250,000,000, due in February 2004, which is already fully cash collateralised
The programme is being implemented by the Region finance department as a tool aimed at improving the
efficiency in the management of the regional healthcare system

long evaluation process of the underlying properties allowed for an in-depth recognition of the regional
healthcare estate

monetisation of otherwise non-transferable assets

accountability of each healthcare entity in the allocation of “its own resources”
4
2. Region of Lazio
Region of Lazio
General Overview
At a glance

Situated in the centre of Italy, with 5.3 million
inhabitants Lazio is the third most populated region
(9.1% of Italy)

Producing about 10.2% of 2001 national GDP, Lazio
is the second largest contributor in Italy after
Lombardy and the eighth overall in Europe out of
approx. 200 similar local authorities

GDP per-capita of approx. EUR 21,800 in 2001 is
higher than the Italian average of approx. EUR
19,620

As of 2001 unemployment rate of the Region is in
line with Italian average rate (9.9% vs. 9.2%)

The region is governed by a centre-right political
coalition, led by President Storace, elected in April
2000 with a 63% majority at the regional council

Next local elections are scheduled in year 2005
Rome
____________________
Source: Region of Lazio, Istat and Istituto Tagliacarne
5
Region of Lazio
Italian Local Governments Framework


The Republic of Italy has a decentralised political and institutional structure with four levels of government

central

the region

the province, and

the municipality
The 2001 Constitutional reform provided among other things

enhanced exclusive legislative power for the regions

the capacity to levy new regional taxes and change tax rates

broader regional responsibilities as for international affairs (i.e. participation in the decision making process of
the EU as well as in the implementation of international agreements and EU acts)

Regions are allowed to borrow only to finance capital expenditures

Under the Internal Stability Pact signed by the central and all local governments, the regions have undertaken that
they will pursue sound financial and administrative management and keep their debt growth and financial balance
in line with EMU’s parameters
6
Region of Lazio
Main Financials
Increasing Fiscal Autonomy

The transfer of responsibilities from the State to all
regions was recently enacted with the devolution of
various taxes previously collected by the State

In 1996 tax current revenues represented 14% of
Lazio’s current revenues, increasing to
approximately 73% in 2001

Main taxes attributed to the Region are

share of the national VAT

IRAP, a regional business production tax

surcharge on the personal income tax IRPEF

car registration tax

gasoline consumption tax

methane gas consumption tax

regional concessions fees
10,000
8,000
EUR million

Lazio current revenues
Taxes
State transfers
6,000
4,000
2,000
0
1996
2001
Most regional taxes are strictly linked to the local
economy
____________________
Source: 1996 and 2001 Regional Actual Financial Reports
7
Region of Lazio
Local Economy
A Strong and Dynamic Area

With GDP of approximately EUR 115 billion, the Region of Lazio ranks second in Italy

Contribution to GDP for 2001 was
81.5% services (mainly tourism – Rome – administrative bodies)

17% manufacturing (chemical, energy, mechanical and construction are the main local industries)

1.5% agriculture
2001 figures show a GDP growth significantly higher than the national average
3.5
3.0
2.5
2.0
1.5
1.0
0.5
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0.0
Ab
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o
2001 GDP growth (%)


-1.0
____________________
Source: Istituto Tagliacarne, Year 2002
8
Region of Lazio
Outstanding Regional Debt
A Stable Level of Debt

Outstanding debt at December 2002 was around EUR 2.0 billion, composed of bank loans and bonds placed on the
international capital markets

Current debt profile

60% at floating rate

all denominated in Euro or swapped into Euro, and


assisted by irrevocable payment mandate (“mandato irrevocabile di pagamento”) to the regional treasurer bank
(Banca di Roma)
The ratio between debt and current revenues has remained fairly stable over the last few years
Oustanding Debt / Current Revenues
25%
20%
18.8%
18.6%
20.2%
20.5%
1998
1999
2000
2001
15%
10%
5%
0%
____________________
Source: Region of Lazio
9
Region of Lazio
Healthcare System
The Main Regional Expenditure

Healthcare is the major regional expenditure, representing 82% of total current expenditures, in line with the Italian
regions average

Healthcare deficits recorded up to year 2000 amount to about EUR 4.6 billion


Deficits recorded after year 2000 are to be entirely covered by the region with recourse to new taxes or sale of assets



EUR 2.4 billion will be covered by the State, once the Region funds the balance of EUR 2.2 billion
in 2002 Lazio increased some IRAP tax rates
Lazio’s deficits are above the national average mainly due to

high quality standards that attract patients from other regions

10 universities and research labs which have costs not covered by the revenues contributed by the State
The Region has taken various measures to reduce the healthcare burden

introduction of a fee on each prescription to reduce “precautionary” purchases of medicines

centralisation of goods and services purchases via public tenders

restructuring of the hospital network

introduction of a periodic budgeting and monitoring system

disposal of assets

hire freeze in the healthcare sector until 2004
____________________
Source: Region of Lazio
10
Region of Lazio
Healthcare System
Recent Developments

The effect of the measures previously described has started showing in the 2002 healthcare deficit which, at EUR
550 mm, was approximately 37% lower than the 2001 deficit (EUR 875 mm), already down from the EUR 950mm
recorded in 2000

On September 20, 2002, the Region received EUR 1.4 bn of state transfer to cover its deficit up to year 1999

The increase in pharmaceutical expenditure for the year 2002 was limited to 0.5%, a significant improvement
compared to a 7% increase in 2001

On January 10, 2003 EUR 6.43 bn was allocated to the Region as its share of the 2002 Healthcare Fund (EUR 200 mm
increase from year 2001)

On January 20, the special commission set up by the Ministry of Economy positively assessed the health of the
Region’s economy on the basis of a list of objectives which the Region achieved along with other 9 regions


Additional resources will be allocated to the Region
On January 31, 2003 all regions agreed on the allocation of the 2003 National Healthcare Fund: Lazio was given
EUR 6.8 bn, a 5.6% increase on 2002, higher than the 3.5% national average
The above information was not known to the rating agencies at the time they last reviewed the
Region’s rating, which was put on negative outlook as a result of the uncertainties surrounding the
effect of the measures introduced to control the healthcare deficit
____________________
Source: Region of Lazio
11
3. Transaction Structure
Transaction Structure
Overview
Structure Diagram
Healthcare
Entities
Regione Lazio
Payment
Delegation
Irrevocable
Mandate of
Payment
Sale of
Hospitals
Regional
Treasurer
Swap
Counterparties
Swap
Agreements
Payment of
Lease
Receivables
SAN.IM. S.p.A.
Payment of
Transfer Price
Servicing
Agreement
Proceeds
Tranche 1
EUR
Lease of
Hospitals
Sale of Lease
Receivables
Cartesio S.r.l.
Banca di Roma
Payment of
Purchase
Price
Tranche 2
EUR
Notes
Tranche 3
USD
Tranche 4
GBP
12
Transaction Structure
Description
The Mechanics

Pursuant to a purchase and sale agreement dated 28 June 2002 entered into between certain healthcare entities
operating in the Region of Lazio (the “Healthcare Entities”), as sellers, and SAN.IM. S.p.A. (“SAN.IM.”), as
purchaser, the Healthcare Entities agreed to transfer to SAN.IM. certain real estate assets (the “Assets”)

On the same date SAN.IM., as lessor, entered into certain lease contracts (the “Lease Contracts”) to lease back the
Assets to the Healthcare Entities, as lessees

Pursuant to the terms of several receivables purchase agreement (each referred to the lease payments due from
each Healthcare Entity) , SAN.IM. will sell to Cartesio the receivables payable by the Healthcare Entities under the
Lease Contracts (the “Lease Instalments”)

The Notes of each Tranche are backed by and share the same rights to the entire portfolio of Lease Instalments due
by the Healthcare Entities to SAN.IM.

The Lease Instalments will represent the principal source of repayment of interest and principal of the Notes
and pursuant to the Payment Delegation, the Region of Lazio has accepted to be the primary and joint-obligor
for the payment of the Lease Instalments

Pursuant to the Irrevocable Payment Mandate between the Region of Lazio and Banca di Roma, acting as Regional
Treasurer Bank, all payments of Lease Instalments up to a total aggregate amount of about EUR 2,000,000,000 will
be paid by the Treasurer Bank directly into the Issuer’s account

Collection procedures in respect of the Lease Instalments will be handled by Banca di Roma, which will act as
Servicer of the transaction

The net proceeds deriving from the issuance of the Notes will be used by Cartesio to pay to SAN.IM. for the
purchase price for the receivables and, in turn, by SAN.IM. to pay the Healthcare Entities for the purchase price of
the Assets
13
4. The Originator
The Originator
Overview
SAN.IM. S.p.A.

SAN.IM. S.p.A (“SAN.IM.”) is a joint stock company, incorporated in Italy and 100% owned by the Region of Lazio

SAN.IM. was established for the sole purposes of

engaging in the purchase of healthcare real estate assets (the “Assets”) owned by certain regional healthcare
entities (the “Healthcare Entities”)

the simultaneous leasing of the same assets back to such Healthcare Entities; and

the assignment of the receivables payable under the lease contracts to a special purpose vehicle

The sale of the Assets from the Healthcare Entities to SAN.IM. was effected pursuant to a purchase and sale
agreement dated 28 June 2002

On the same date, the lease contracts were entered into between the Healthcare Entities, as lessees, SAN.IM. as
lessor, and the Region of Lazio, as primary and joint obligor, as a result of the Region of Lazio’s acceptance of the
delegation of payment

The Region of Lazio has agreed to pay the lease instalments directly to the Issuer of the Notes on behalf of both the
Healthcare Entities and SAN.IM.

Under the lease Contracts, the Healthcare Entities are granted an option to re-purchase the Assets upon expiry of
the term of the lease contracts for a nominal consideration of EUR 1
14
5. The Portfolio
The Portfolio
Summary

The portfolio (“Portfolio”) is comprised of the receivables payable under the lease contracts entered into between
each Healthcare Entity, SAN.IM. and the Region of Lazio

In accordance with an express provision contained in the lease contracts, SAN.IM. will sell the Receivables arising
thereunder to Cartesio which will act as issuer in one or more issuances to be carried out by 31 December 2003
under the Programme

The lease instalments due by the Healthcare Entities to SAN.IM. pursuant to the terms of the lease contracts will be
directly paid by the Region, in the name and on behalf of the Healthcare Entities, pursuant to the Payment
Delegation granted by each individual Healthcare Entity and accepted by the Region under the relevant lease
contract and in accordance with the provisions of Regional Law No. 16/2001

The lease instalments will be paid directly into the Collection Account on a semi-annual basis, in arrear, and will be
made by bank transfer. The amounts due by the Healthcare Entities to SAN.IM. under the lease contracts are to be
determined on the relevant Issue Date

The payment of the lease instalments may not be delayed or suspended for any reason whatsoever including in the
event of disputes, controversies or impossibility of use of the Assets

The lease payments to be made by Region of Lazio to Cartesio are due regardless of the status of the underlying
Assets
15
The Portfolio
The Healthcare Entities

The Healthcare Entities were established pursuant to Legislative Decree No. 502 of 30 December 1992 as amended
(“Lgs. D. No.502”)

In particular, the Region of Lazio has provided for the re-organisation of its regional healthcare service, including
the establishment of the Healthcare Entities pursuant to Lgs. D. No. 502, through Regional Law No. 18 of 16 June
1994 as amended (“Regional Law No.18”)

Article 5 of Regional Law No.18 has provided for the establishment within the Region of Lazio’s territory of 15
Healthcare Entities

The Healthcare Entities do not have equity capital but, in line with their public legal status, have an endowment
fund (fondo di dotazione) established by the Region of Lazio

The Healthcare Entities:




are autonomous entities from the Region although strictly related to it due to the functions which are delegated
to them
are supervised by the Region
must perform their functions in an efficient and cost-saving way and in compliance with the applicable
budgetary constraints, and
are obliged to prepare annual and multi-year forecast financial statements that are subject to the Region’s
control
16
The Portfolio
The Healthcare Entities

Approximately 81.4% of the Region’s current expenditure in 2001 was related to transfer to the Healthcare Entities

Among the initiatives that the Region of Lazio is developing to finance the aggregate healthcare deficits, the Region
has approved Regional Law 16/2001 that has authorised the sale and lease-back transaction

The table below shows the number of properties sold by each Healthcare Entity and the corresponding purchase
price
Amounts in thousand of Euro
Healthcare Entities
Healthcare Entity S. Filippo Neri
Healthcare Entity S.Camillo - Forlanini
Healthcare Entity San Giovanni - Addolorata
Healthcare Entity Rome A
Healthcare Entity Rome B
Healthcare Entity Rome C
Healthcare Entity Rome D
Healthcare Entity Rome E
Healthcare Entity Rome F
Healthcare Entity Rome G
Healthcare Entity Rome H
Healthcare Entity Viterbo
Healthcare Entity Latina
Healthcare Entity Rieti
Healthcare Entity Frosinone
Total
No. Of Hospitals
Value
1
1
3
3
3
3
2
3
2
6
6
5
7
5
6
56
121,000
312,000
183,215
113,857
123,674
186,220
50,550
35,226
47,004
110,556
122,124
107,300
124,155
95,297
243,174
1.975,352
17
6. The Issuer
The Issuer
Cartesio S.r.l.

The Issuer was duly incorporated under the laws of the Republic of Italy under the name of Cartesio S.r.l.
(“Cartesio”) on 9th February 2000

Cartesio is a multi-purpose vehicle and may engage in separate offerings in accordance with the Italian
Securitisation Law 130/99

The Issuer has so far engaged in two transactions prior to this Series 2003-1, namely Series 2001 - 1 and Series
2001 - 2
Series
Originator
Amount
Maturity
Status
2001-1
TAV – Ferrovie dello Stato SpA
EUR 1,000,000,000
19 January 2026
Outstanding
2001-2
Region of Lazio
EUR 250,000,000
23 August 2002
Fully reimbursed
EUR 250,000,000
23 February 2004
Fully collateralised
18
7. Highlights
Highlights
Irrevocable Payment Mandate
A Powerful Tool

By Regional law the Treasurer Bank is irrevocably and unconditionally instructed to pay interest and principal
when due

The Treasurer Bank is required to allocate from certain regional revenues an amount sufficient to timely and fully
meet interest and principal payments

Obligations(1) assisted by such mechanism practically allow the relevant creditors to enjoy a priority vs. all other
regional expenses (e,g., supply contracts)

Debt service assisted by the payment mandates is 1.5% of regional revenues

No default has ever occurred in Italy on local government obligations (Region of Lazio included) secured by an
Irrevocable Payment Mandate
Regional Revenues
Treasurer
Bank
Treasury
Bank
Irrevocable Payment Mandate
Debt Service
Investors
Regional Expenses
____________________
(1) Assumes lease instalments are included
Source: Region of Lazio, Year 2001
19
Highlights
The Programme
The EUR 2,000,000,000 Asset Backed Euro Medium Term Note Programme

Under the programme, the Issuer may from time to time issue different tranches of Notes which may be issued in
different currencies, and with different amortisation profiles

The aggregate nominal amount of the Notes issued cannot exceed the Programme Limit (EUR 2,000,000,000
equivalent)

On the first Issue Date (5 March 2003) Cartesio issued four Tranches of Notes in USD, GBP and EUR, totalling
approximately EUR 1,100,000,000 equivalent
 Tranche 1: EUR 200ml, 19.3 years average life, coupon 6 month Euribor + 50 bps, final maturity 7 March 2033


Tranche 2: EUR 200ml, 25 years average life, coupon 6 month Euribor + 57 bps, final maturity 7 March 2028

Tranche 3: US$ 450ml, 30 years average life, fixed rate coupon 6.022%, final maturity 7 March 2033

Tranche 4: GBP 200ml, 25.7 years average life, coupon 6 month Libor + 62bps, final maturity 7 March 2033
All Notes issued under the programme are expected to be assigned ratings equal to the ratings of the Region of
Lazio, currently at

Aa3 (negative outlook) from Moody’s

A+ (negative outlook) from S&P

The Notes of each Tranche will be identical from all other features and will rank pari passu among themselves and
with the Notes of each other Tranche

A pricing supplement relating to each Tranche of Notes shall contain specific information on such Tranche which
differs from the general description contained in the Offering Circular
20
Highlights
Pre-enforcement Priority of Payments

The Issuer available funds will be applied on each payment date in the following order of priority, to the extent
that payments of a higher priority have been made in full
Use of Issuer Available Funds
Issuer On-Balance Sheet Expenses
Note Trustee and Security Trustee Fee
Third Parties
Interest and
Principal on the Notes
Amounts due
under any Swap
Swap Default Termination Amounts(1)
Any residual Amounts to the Originator
____________________
(1) In the event of the Swap Counterparty’s default
22
Highlights
The Swap Agreements
Swap Agreements

All amounts payable under the Lease Contracts are payable in Euro, therefore in order for the Issuer to make
payments due on the Notes of any Tranche issued in any currency other than Euro, the Issuer will enter into one or
more currency swap transaction with one or more Swap Counterparties on or before the relevant Issue Date in relation
to that Tranche, in order to hedge against exchange rate movements adverse to the Issuer

All amounts paid under the Lease Contracts will be paid according to a pre-determined payment schedule. To hedge
against the possible variance in the rate of interest payable by the Issuer under any Tranche of Notes which bears a
floating rate of interest the Issuer will enter into one or more interest rate swaps with one or more Swap
Counterparties on or before the relevant Issue Date in relation to that Tranche

All Swap Counterparties will need to meet the standard minimum required ratings set by the rating agencies
23