+The Elements of Capital and Strategy
CAPITAL MARKETS UPDATE
H2C INSIGHTS as of Jan. 18, 2021
Rates and Economic News
From Jan. 8 to Jan. 15, 10-year and 30-year MMD increased by 1 bp, while 10-year and 30-year Treasury rates decreased by 2 bps. The 30-year MMD-to-Treasury ratio increased to 79.5 percent, compared to 78.1 percent last week. For the seven-day period ending Jan. 13, municipal bond funds recorded $2.6 billion in net inflows, the 10th consecutive week of inflows.
For the seven-day period ending Jan. 15, U.S. Corporate IG spreads decreased by 1 bp, and tax-exempt “A” rated healthcare spreads to 30-year MMD decreased by 5 bps.
From Jan. 6 to Jan. 13, SIFMA decreased by 1 bp to 0.06 percent. Tax-exempt municipal money-market fund assets decreased by $1.1 billion to total net assets of $106.3 billion for the seven-day period ending Jan. 13.
On Jan. 14, the U.S. Department of Labor reported that 965,000 initial jobless claims were filed for the week ending Jan. 9, approximately 181,000 higher than the downwardly revised total of 784,000 initial jobless claims in the prior week. This brings the running total number of individuals who have filed for unemployment insurance in the past 45 weeks to 75.2 million. However, continuing claims, which details how many Americans remain unemployed, totaled 5.3 million, an increase of 199,000 from the previous week’s upwardly revised number of 5.1 million.
On Jan. 14, President-elect Joe Biden announced the “American Rescue Plan,” a $1.9 trillion dollar coronavirus relief proposal, which he is set to present to Congress this week once he takes office Wednesday. The extensive proposal includes $1,400 stimulus payments per person to eligible recipients, a $400-a-week unemployment supplement through September, rental and eviction assistance for low- and moderate-income households, extended pay leave, increases in child tax credits, aid for states and schools, increased support for vaccinations and testing, and a proposal to increase the minimum wage to $15 an hour.
Recent Pricings
On Jan. 12, Trinity Health (Aa3/AA-/AA-), Livonia, Mich., priced a total of $300.0 million in taxable, fixed-rate bonds (Series 2021). The bonds are structured as a bullet maturing in 2040 with a coupon of 2.632 percent, a spread of 95 bps to 20-year Treasury.
On January 14, Baylor Scott & White Health (Aa3/AA-/NR), Dallas, Texas, priced a total of $1.3 billion in taxable, fixed-rate bonds (Series 2021). The bonds are structured as three term bonds. The $100 million term bond, maturing in 2025, has a coupon of 0.827 percent, a spread of 35 bps to five-year Treasury. The $300 million term bond, maturing in 2030, has a coupon of 1.777 percent, a spread of 65 bps to 10-year Treasury. The $900 million term bond, maturing in 2050, has a coupon of 2.839 percent, a spread of 95 bps to 30-year Treasury.
On Jan. 14, St. Luke’s University Health Network (A3/A-/NR), Bethlehem, Pa., priced a total of $132.7 million in tax-exempt, fixed-rate bonds (Series 2021). The bonds are structured as a bullet maturing in 2053 with a coupon of 3 percent and priced at a YTC of 2.67 percent, a spread of 120 bps to 30-year MMD. This offering is one of the first long-term, tax-exempt healthcare transactions to price in 2021. The 3 percent coupon was utilized to meet St. Luke’s goal of minimizing yield to maturity.
On Jan. 15, Cheyenne Regional Medical Center (NR/A/NR), Cheyenne, Wy., priced a total of $71.6 million in tax-exempt, fixed-rate bonds (Series 2021). The bonds are structured as both serial and term bonds. The serial bonds mature from 2022 to 2038, with coupons of 4 percent. The $18.3 million term bond, maturing in 2042 with a coupon of 3 percent, priced at a YTC of 2.35 percent, a spread of 103 bps to 21-year MMD.
Upcoming Transactions
AHS Hospital Corp. (Aa3/AA-/NR), Morristown, N.J., is planning to issue $450 million in taxable, fixed-rate bonds (Series 2021). The bonds will be used to fund general corporate purposes. (See AHS Hospital Corp. POM.)
Kettering Health Network (A2/A+/NR), Dayton, Ohio, is planning to issue $175.7 million in tax-exempt, fixed-rate bonds (Series 2021). The bonds will be used to refund prior debt and fund new capital projects. (See Kettering Health Network POS.)
Recent Rating Actions
Moody’s:
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Mosaic Health System (MO): Affirmed A1; Outlook stable
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Kettering Health Network (OH): Affirmed A2; Outlook negative
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AHS Hospital Corp. (NJ): Affirmed Aa3; Outlook stable
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Valley Children’s Healthcare (CA): Affirmed A1; Outlook stable
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Novant Health (NC): Affirmed Aa3; Outlook revised to “negative” from stable
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Beth Israel Lahey Health (MA): Affirmed A3; Outlook stable
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Franciscan Alliance, Inc. (IN): Affirmed Aa3; Outlook stable
S&P:
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San Benito Health Care District (CA): Assigned AA-; Outlook stable
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Kettering Health Network (OH): Affirmed A+; Outlook stable
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Arkansas Children’s Hospital, Inc. (AK): Assigned AA-; Outlook stable
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AdventHealth (FL): Assigned AA; Outlook stable
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AHS Hospital Corp. (NJ): Affirmed AA-; Outlook stable
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Bowling Green-Warren County Community Hospital Corp.; Affirmed A+; Outlook positive
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Tarrant County Hospital District (d/b/a JPS Health Network) (TX): Assigned AA; Outlook stable
Fitch:
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CHRISTUS Health (TX); Affirmed A+; Outlook stable
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Baptist Health Care (FL): Affirmed BBB; Outlook stable
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University of Colorado Health (CO): Affirmed AA; Outlook stable
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Hawai’i Pacific Health (HI): Affirmed AA-; Outlook revised to “negative” from stable
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Palos Community Hospital (IL): Upgraded to AA+ from AA-; Outlook stable
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Southcoast Health System, Inc. (MA): Assigned A-; Outlook stable
MMD YIELD CURVE • Current vs. 1 Year Ago
UST YIELD CURVE • Current vs. 1 Year Ago
INTEREST RATE SNAPSHOT
ABOUT HAMMOND HANLON CAMP LLC
H2C is an independent, healthcare-focused strategic advisory and investment banking firm with a particular emphasis on the not-for-profit sector. The firm’s principals have been lead advisors on hundreds of transactions in the healthcare industry representing billions of dollars in value, offering the experience and industry knowledge to achieve the most favorable results.
Source: Bond Buyer, Bloomberg and MMD – Thomson Reuters Municipal Market Data as of January 15, 2021.
(1) Rates as of January 13, 2021.
For additional information, please contact Elaine Yao (eyao@h2c.com or 212 257 4509). The information presented herein was obtained from resources believed to be reliable and accurate, but Hammond Hanlon Camp LLC does not guaranty the accuracy or completeness, or assume a responsibility for any loss which may result from the action by any person upon such information. Such information is subject to change without notice and is not intended as a recommendation, offer, or solicitation with the respect to the purchase or sale of any security.
