Community Health Systems Inc. (CYH:US), the second-largest U.S. hospital chain, raised $1.2 billion to refinance notes maturing in 2015 on the busiest day for issuance in almost two weeks.
The company’s 7.125 percent bonds due July 2020, which yield 596 basis points more than similar-maturity Treasuries, helped lead issuers selling about $8.9 billion of dollar- denominated corporate debt, the most since June 26, according to data compiled by Bloomberg. Proceeds from the new senior debt will be used to purchase the 8.875 percent bonds at 102.6 cents on the dollar after a July 3 tender offer, the Franklin, Tennessee-based company said today in a regulatory filing.
Community Health “will continue to see stable margin performance and maintain very good liquidity” even as its ability to cut leverage with free cash flow is constrained by higher capital spending, Moody’s Investors Service analysts led by Dean Diaz wrote today in a report rating the new debt B3, six levels below investment grade.
The company sold the debt less than two weeks after the U.S. Supreme Court decided to leave President Barack Obama’s transformation of the health system substantially intact. Junk bonds of health-care providers rallied after the ruling, which boosted investor optimism for the industry by reducing the risk that the companies will be stuck with unpaid bills.
The 2015 notes, also rated at B3 by Moody’s, traded at 102.75 cents to yield 7.83 percent at 4:20 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Community Health’s bonds were the most actively traded dollar-denominated corporate securities with 138 trades of $1 million or more.
Credit Suisse Group AG, Bank of America Corp., Citigroup Inc., Credit Agricole SA, Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley, Royal Bank of Canada, SunTrust Banks Inc. and Wells Fargo & Co. managed the sale, according to the filing.
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