Deals in the secondary market traded 1/8-1/4 softer across the board last week as investors made room in their portfolios for HCA's $8.5 billion term loan, which traders said is due to break today. A buyside trader said the number of other large deals coming to market also caused softer trading levels.
HCA's term loan was already well oversubscribed last week. The trader said $11 billion was already in the books. It launched three weeks ago and had about $5 billion in the book a week later, although some investors had predicted it would be hard to fill given healthcare buckets were already reasonably full (CIN, 11/6). Pricing is set at LIBOR plus 2 3/4% and steps down to LIBOR plus 2 1/2% when leverage falls below 6 times. A trader said spreads on HCA loan-only credit default swaps were quoted very tight at 168-176.
HCA's senior secured '14 and '16 notes broke for trading last Thursday. Both bonds moved up three points to trade at 103 1/2. A trader said interest was high in the debt because of the good collateral backing the senior bonds. He added trading was heavy in the new issue, but could not give estimates of volume. He said the fact the senior bonds are private placements contributed to the heavy trading of the notes. Had their prices been disseminated on TRACE, less people would have bought into the bonds because it would have been harder to make a profit, he added. An HCA spokesperson did not return a call seeking comment.