Rotech Healthcare's $275 million deal broke for trading last week and roughly $50 million traded in the 100 1/4-100 3/4 range. During syndication the oversubscribed deal was highly popular with institutional investors looking to scoop up the recently spun off Integrated Health Services subsidiary. As a result, buy-side allocations were said to be slim (LMW, 3/18).
Prior to the break, dealers expected the paper to perform well. "It's going to trade well but at some point it's going to cap out," said one dealer. Another trader noted that high-yield in health care is pretty strong. Despite a full calendar of new issues looking to break in the near term, investors are confident that the new supply will not depress prices. "The fight for quality will continue to be strong," said one dealer, noting that a lot of investors have been sitting on the sidelines waiting for choice deals. Janet Ziomek, company cfo, could not be reached by press time.