Healthcare sector pops up on distressed market’s radar; Community Health explores options

By Stephanie N. Rotondo

Seattle, Sept. 19 – The healthcare space has started to tiptoe around the edges of the distressed bond market. Community Health Systems Inc., a regular name in the high-yield arena, appears to be the latest victim, traders reported Monday.

On Friday, it was reported that the Franklin, Tenn.-based hospital chain had hired financial advisers and was exploring its options. The reports were attributed to “people with knowledge of the matter.”

Come Monday, the company confirmed the reports, though it noted that talks were only in the preliminary stages and there was no set timeline as to when a deal of any kind would get done.

Furthermore, the company said it did not plan to make any further comments on the review until something concrete was in the works.

When the reports first materialized on Friday, the Community Health bonds dropped “a fair amount,” a trader said. As Monday’s session began, the market started to push up the debt, but appeared to give up by the bell, he noted.

As such, the 6 7/8% notes due 2022 opened the day around 87˝, which compared to an 83˝ to 84 zip code on Friday. By day’s end, the bonds had settled back in to “85-ish,” the trader said.

At another desk, a trader said there were “tons of trades” in the 6 7/8% notes, which he called down over 2˝ points at 84 7/8.

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