A $10 million piece of Triad Hospitals' bank debt traded around 101 last week, as dealers reported growing investor interest in using health care credits to round out their portfolios. "Institutional lenders need health care exposure and have been all over this name," noted a dealer. "It was a sector that got crushed over the last couple of years and as a result a lot of credits filed and lenders sold. Additionally, there were virtually no new issues during this time so institutional portfolios are light. The sector is rebounding nicely as lenders are looking for more exposure and there is not much paper out there." Calls to a company spokeswoman were not returned.
Earlier this month, Moody's Investors Service assigned a Ba3 rating to the company's $1.4 billion senior secured credit facility because of the risk associated with its acquisition of Quorum Health Group. "There's risk associated with any acquisition, but the risk is greater because Quorum is a larger company," Russell Pomerantz, senior analyst, said at the time.
Triad has a $1.675 billion credit facility that breaks down into six tranches and matures next year. Pricing, which is tied to maturity, ranges from 550 basis points to 800 basis points over LIBOR. Bank of America, J.P. Morgan Chase, Merrill Lynch & Co., and Salomon Smith Barney are the lead arrangers, according to Capital DATA Loanware.