H2C INDUSTRY INSIGHTS: CAPITAL MARKETS

Bond Issuance & Volume

Week of August 1, 2022

Primary Market Activity: Healthcare

Commentary – Monthly Deal Activity

Not-For-Profit Hospital Issuance • ($ in billions)

Chart 1.png

Primary Market Activity: Higher Education

Commentary – Monthly Deal Activity

Not-For-Profit Hospital Issuance • ($ in billions)

  • Total municipal bond issuance was $25.6 billion in July, a 22% decrease compared to June and a 32% decrease YoY. YTD municipal bond issuance has been $234 billion, a YoY decrease of 15% (1).

  • Total not-for-profit hospital bond issuance grew in July compared to June with a 6% increase MoM, however, total issuance fell by 28% YoY. All not-for-profit hospital issuance in the month of July was tax-exempt, nearly doubling June’s tax-exempt issuance ($1.5 billion vs $780 million) and resulted in a nearly 50% increase YoY (2).

  • July’s strong not-for-profit hospital issuance was almost completely due to Intermountain Healthcare’s $1.4 billion in tax-exempt issuances. Following its acquisition of SCL Health (CO), the Utah-based system created a new obligated group to issue six separate series ranging from $125 million to nearly $500 million and included both fixed-rate and variable-rate debt (78% fixed, 22% variable). 

August Graph 1.png

(1) Source: The Bond Buyer market data as of July 31, 2022

(2) Source: Bloomberg

(3) Mandatory Tender Date

(4) Spreads as of the date of sale. Tax-exempt bonds are spread to the corresponding AAA MMD benchmark maturity published by TM3. Taxable bonds are spread to the 30-year US Treasury unless otherwise noted.

Chart 2.png
  • Total municipal bond issuance was $25.6 billion in July, a 22% decrease compared to June and a 32% decrease YoY. YTD municipal bond issuance has been $234 billion, a YoY decrease of 15% (1).

  • Higher education bond issuance fell sharply in July with just $580 million in total volume, representing a 59% decrease MoM and an 82% decrease YoY. Nearly all of July’s issuance was for tax-exempt debt. Year to date, higher education bond volume is down 18% compared to 2021. Further, both the University of Montana and Eastern Kentucky University insured their bonds with AGM and BAM, respectively (2).

  • July’s higher education volume was comprised of several relatively small deals with Northeastern University’s $379 million issuance being the only transaction to top $60 million. The money will be used to construct and equip a new 340,000 square foot engineering building that will include robotics and computer laboratories, classrooms, offices, and a dining area (3).

August Graph 2.png

(1) Source: The Bond Buyer as of June 30, 2022

(2) Source: Bloomberg

(3) Source: Yeshiva University’s Series 2022A Preliminary Official Statement

(4) Has not yet posted an official statement. Pricing results are sourced from Thomson Municipal Market Monitor (TM3)

(5) Spreads as of the date of sale. Tax-exempt bonds are spread to the corresponding AAA MMD benchmark maturity published by TM3. Taxable bonds are spread to the 30-year US Treasury unless otherwise noted.

About H2C Securities Inc. ("H2C")

H2C is a strategic advisory and investment banking firm committed to providing superior advice to healthcare organizations, higher education institutions, and related companies throughout the United States. H2C’s professionals have a long track record of success in healthcare and higher education mergers and acquisitions, capital markets, and real estate transactions, acting as lead advisors on hundreds of transactions representing billions of dollars in value.

Securities and services offered through H2C Securities Inc., member FINRA/SIPC, a registered broker-dealer and an indirect subsidiary of Fifth Third Bank, National Association. All rights reserved. Securities and services offered through H2C Securities Inc.: Are Not FDIC Insured; Offer No Bank Guarantee; May Lose Value; Are Not Insured by any Federal Government Agency; Are Not a Deposit.

H2C Capital Markets Team

Michael Hammond

Managing Director

212.257.4550

mhammond@h2c.com

George Huang

Executive Director 

212.257.4529

ghuang@h2c.com

Luke Vaughn

Analyst

312.508.4206

lvaughn@h2c.com

William B. Hanlon III

Managing Director

858.242.4801

bhanlon@h2c.com

Victoria Poindexter

Managing Director

312.508.4201

vpoindexter@h2c.com

Richard Bayman

Managing Director 404.937.1340

rbayman@h2c.com

Emily Abrantes

Managing Director

212.257.4500

eabrantes@h2c.com

Shawn Sinel

Director

212.301.2700

ssinel@h2c.com

Catherine Gao

Vice President

212.257.4508

cgao@h2c.com

Mike McCullough

Senior Associate

212.257.4511

mmccullough@h2c.com

Andy An

Associate

312.508.4208

yan@h2c.com

Greg Zuber

Analyst

312.508.4202

gzuber@h2c.com

Calvin Zhu

Analyst

847.654.1508

czhu@h2c.com

Anirudh Vemulapalli

Analyst

212.257.4534

avemulapalli@h2c.com