Loans move higher, led by healthcare, HCA shines; LCDX up a point; Wynnewood sets meeting

By Paul A. Harris

St. Louis, July 29 - The bank loan market was ¼ point stronger over the past couple of days, a trader said on Wednesday.

"Same story, different day," the source remarked.

The LCDX 12 index gained a point Wednesday, according to a syndicate official who quoted the index at 92.45 bid, 92.75 offered, and on a spread basis, at 756 bps bid, 744 bps offered.

HCA puts focus on healthcare

There was reasonable activity in the secondary market, a trader said on Wednesday.

"It's hard to find paper," the source commented.

Once again it was the healthcare sector that seemed to engender the most comment. The nom du jour was HCA Inc.

On Wednesday the company reported stellar earnings.

Among the highlights:

• Revenues in the second quarter increased 7.2% to $7.483 billion;

• Net income totaled $282 million, compared to $141 million in the prior year's second quarter;

• Adjusted EBITDA totaled $1.399 billion, compared to $1.104 billion in the second quarter of 2008; and

• Same facility equivalent admissions increased 4.4%, while same facility admissions increased 1.9% in the second quarter compared to the same period last year.

Also on Wednesday HCA continued to term out its bank debt.

The company priced a massively upsized $1.25 billion issue of 7 7/8% senior secured first-lien notes due Feb. 15, 2020 (Ba3/BB) at 98.254 to yield 8 1/8%, in a junk deal that was said to have played to $8 billion of demand.

HCA's bank loans were once again stronger on the day, a trader said.

"We traded a lot of it," the source said, adding that both the term loan A and the term loan B were up 1 to 1¼ points.

The term loan A was at 94½ bid, 95¼ offered. The term loan B was at 94 bid, 94½ offered.

Healthcare back to pre-Lehman levels

"Healthcare spreads are now back to pre-Lehman levels," said a money manager whose portfolio includes both junk bonds and bank loans.

The investor was of course referring to the dramatic spread widening which occurred amid the general melee in the capital markets when the apparently not-too-big-to-fail Lehman Brothers filed for Chapter 11 bankruptcy protection on Sept. 15, 2008.

Also better on Wednesday was the bank loan paper of Health Management Associates, Inc., the investor said, spotting the revolver at 84 bid, 87 offered, and the term loan at 93 bid, 94 offered - both better on the day.

And trailing the HCA earnings call, the bank loans of Community Health Systems were also up 1½ points, the money manager said.

Wynnewood sets meeting

The Wednesday session produced very little primary market news.

Wynnewood Refining Co., a wholly owned subsidiary of Gary-Williams Energy Corp., will hold a bank meeting on Thursday for its $150 million term loan, according to an informed source.

Deutsche Bank is leading the deal, which is talked at Libor plus 650 to 700 basis points to price at 90, with a 3% Libor floor.

The Libor spread range is 50 bps to 100 bps wider than the Libor plus 600 bps initial guidance.

The company is also doing a $150 million asset-based revolver.

Proceeds will be used to refinance debt.

The company is based in Wynnewood, Okla.

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