Toledo Hospital notes decline; Community Health mixed; Diamond Sports thinly traded

By Cristal Cody

Tupelo, Miss., Aug. 23 – The distressed health care space remained under pressure on Tuesday following a fresh Chapter 11 bankruptcy announcement from Carestream Health Inc.

Toledo Hospital’s 5.325% senior secured notes due 2028 (Baa3/BB) were down about 5½ points on Tuesday and have given back nearly 25 points since the start of the month.

Community Health Systems Inc.’s notes went out flat to slightly softer.

The session saw financial markets improved from Monday’s volatility but remained mostly soft with the S&P 500 index down 0.22% and the Nasdaq flat by the finish.

“We’re seeing most things down,” a source said.

The iShares iBoxx High Yield Corporate Bond ETF rose 19 cents, or 0.25%, to $76.27.

The CBOE Volatility index increased 1.3% to 24.11 after climbing over 18% on Monday.

In other distressed market action, Ahern Rentals, Inc. announced Tuesday that it elected to terminate its exchange offer for its 7 3/8% second priority senior secured notes and return any tendered notes.

The notes have been quiet in the secondary market over the past week.

Diamond Sports Group LLC’s paper also has been mostly quiet this month with the secured and unsecured notes last seen trading in the low to high teens.

Toledo Hospital softens

Toledo Hospital’s 5.325% senior secured notes due 2028 (Baa3/BB) dropped about 5½ points in mostly light secondary action on Tuesday with the issue quoted at 70 bid late afternoon, a source said.

The notes from the company doing business as ProMedica Health System, Inc. have given back nearly 25 points since the start of the month.

The Ohio-based health care company’s paper was dropped to junk by S&P Global Ratings on Aug. 9.

CHS little moved

CHS/Community Health Systems, Inc.’s notes went out flat to slightly softer in light trading action over the day, a source said.

The 6 1/8% senior secured notes due 2030 (Caa2/CCC) fell 1/8 point to 62 3/8 bid.

The Franklin, Tenn.-based operator of acute care and outpatient facilities’ 6 7/8% senior notes due 2029 (Caa2/CCC) were flat at 62¾ bid by the close.

Ahern notes quiet

Ahern Rentals’ 7 3/8% second priority senior secured notes due 2023 (Caa3/C) were not active following the company’s announcement, a source said.

The issue was last seen in the secondary market a week ago at 78 bid.

The bonds have dropped from a low 90s handle in May.

Ahern Rentals had extended the exchange offer for the notes to Aug. 31 after the offer first expired July 28.

The company had announced on June 30 the offer to exchange $550 million of the notes for new 8 3/8% second priority senior secured notes due 2026.

Ahern also was seeking consents from holders to amend the indenture governing the issue.

The Las Vegas-based equipment rental company announced in September 2021 that it would not refinance the issue due to market conditions.

Diamond Sports flat

Diamond Sports’ paper has been thinly traded over the month and remained mostly quiet on Tuesday, a source reported.

The 5 3/8% senior secured notes due 2026 (Caa3/CCC+) were trading with a low 19 handle in thin supply during the session.

Diamond Sports’ 6 5/8% senior notes due 2027 (Ca/CCC-) were last seen Friday flat on the week at 10 bid.

Parent company Sinclair Broadcast Group, Inc. reported Aug. 3 that it “deconsolidated” Diamond Sports from its financial statements.

The Chesapeake, Va.-based sports broadcast group completed a distressed debt exchange in March.

Distressed index softens

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns softened on Monday.

One-day returns were minus 0.93%, down from minus 0.63% on Friday and 0.47% the same day last week.

Month-to-date total returns declined to 2.16% on Monday from 3.11% on Friday and 4.49% in the week-ago session.

Year-to-date total returns fell to minus 18.96% from minus 18.02% on Friday and minus 17.11% in the same session the week prior.

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