Large pieces of HealthSouth's bank debt traded in the low 80s last week down from the high 80s. Dealers said one seller's $40-50 million of exposure traded in chunks between the 80-82 context. The seller is believed to have been an original lender that was unable to auction the paper when coming to the market at an earlier time. "He just wanted out," said one trader, regarding the seller's motive. One of the pieces sold by this lender was a $25 million piece, which traded in the 82 context. A $10-15 million slice of HealthSouth bank debt also traded last week in the 821/2 range, according to a dealer, but whether the paper came out of the same seller could not be determined.
Traders said the market for the loan was pushed down due to the size of the piece unloaded. The paper should trade better now that this piece has been worked out, said one dealer. Earlier this month, the bank debt rallied close to the 90 level following a call that the company hosted to give its stakeholders an update on its restructuring. During that call, company officials said HealthSouth is trying to avoid bankruptcy. But they also noted that a few critical uncertainties still exist, such as federal investigations into the company's financial statements as well as a forensic review (LMW, 7/14). Calls to Guy Sansone, HealthSouth's acting cfo, were referred to a company spokesman. The spokesman declined to comment on the bank debt trades, but said HealthSouth is continuing to cooperate and assist the ongoing investigations.