Morning Commentary: UnitedHealthcare contract lifts Envision’s bonds; outflows continue

By Paul A. Harris

Portland, Ore., Dec. 11 – News that people insured by UnitedHealthcare will have in-network access to emergency room services provided by Envision Healthcare Corp., beginning in the new year, according to a new agreement, sent Envision’s bonds higher on Tuesday, according to a bond trader.

The Enterprise Merger Sub Inc. (Envision Healthcare) 8¾% senior notes due October 2026 were up slightly less than 2 points at 91 bid, the trader said.

In September UnitedHealthcare sent letters to more than 250 hospitals warning that it might drop Envision from its network starting in 2019, a move that could have impacted more than 1 million UnitedHealthcare members.

UnitedHealthcare, at the time, described Envision's emergency room billing practices as “egregious.”

In a Tuesday press release, UnitedHealthcare said that its new agreement with Envision “ensures (that) the people we serve have continued access to Envision’s hospital-based services while delivering better value to our customers and consumers.”

Elsewhere in Tuesday trading, bonds of Travelport Worldwide Ltd. continued to improve following Monday news that the company will be acquired by Siris Capital Group LLC and Elliott Management Corp. in an all-cash deal valued at about $2 billion.

The Travelport Corporate Finance plc 6% senior secured notes due March 2026 were slightly higher at 101¼ bid at mid-morning, the trader said.

Those bonds were up 1½ points on Monday.

The acquisition is set to close in the second quarter of 2019.

Away from headline news, trading was quiet and liquidity was low on Tuesday morning, traders said.

High-yield ETF share prices were better on the morning, in line with equities. The iShares iBoxx $ High Yield Corporate Bd (HYG) was up two bits, or 0.3%, at $83.14.

Oil prices were up smartly early Tuesday.

The barrel price of West Texas Intermediate crude for January 2019 delivery was up $1.28 higher (2.51%) at $52.28.

The bellwether California Resources Corp. 8% senior secured second-lien notes due December 2022, a big liquid issue employed by high-yield bond investors for the purpose of tracking crude oil prices in the index, were basically unchanged at 75½ bid, a trader said.

The primary market remained quiet as it has been since the beginning of December.

A window for potential late-year issuance is closing fast, sources say.

No new issue activity is anticipated ahead of the New Year, according to syndicate officials canvassed by Prospect News.

Monday outflows

The daily cash flows of the dedicated high-yield bond funds remained substantially negative on Monday, a trader said.

High-yield ETFs sustained $606 million of outflows on the day, trailing $314 million of outflows reported on Friday.

Actively managed high-yield funds saw $215 million of outflows on Monday, following $475 million of outflows on Friday, the source said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.