An auction for Integrated Health Services' bank debt resulted in a trade at 42 1/2 from 43 as dealers cited a softening bank debt market but noted health care is on its way up. Levels were quoted at 40-42 later in the week. The size of the piece could not be ascertained. "The bonds have come back down. People are just taking a breather right now," said a trader. "Distressed prices have run up, and people are just stepping back." In early March, Integrated Health was bid at 39 1/4.
The Sparks, Md.-based company owns and operates 365 nursing homes and more than 15 specialty hospitals that offer rehabilitation services. "[Integrated] has a big syndicate. The view is they've been on the mend," said a dealer. Another trader said the whole sector seems to be getting better. "The health care sector bottomed out a year ago," he said, but added that a slowing market is pushing levels down slightly. "The market enthusiasm for distressed and high-yield has eased off after the early year run up. People are seeing the stock market continue to crack and the economic news isn't all that positive. The concern among the high-yield bond investors is the economy may stay weak for some time, rather than snap back."
Levels have jumped around as market players speculate on whether the company is about to pull out of Chapter 11 bankruptcy. An official at Integrated Health declined to comment on market speculation. Last month dealers vied for a $40 million piece, pushing levels up seven points. Integrated Health has a $2.15 billion credit facility that breaks down into a $1 billion revolver, a $750 million term loan "B," and a $400 million "C" tranche. Salomon Smith Barney and TD Securities are the lead arrangers, according to Capital DATA Loanware.