CHICAGO — Trinity Health pushed back the planned sale of $1.1 billion of hospital bonds as municipal yields jumped this week, and shifted the deal to the day-to-day calendar.
The borrowing was to be one of the largest to hit the market this week.
The Michigan-based provider was set to price $1.1 billion of tax-exempt bonds Feb. 3 and the $350 million taxable bonds on Feb. 5 or 6. The team decided to shift the tax-exempt piece to the day-to-day calendar Tuesday as borrowing rates rose in the bond market.
The taxable piece could still sell as early as tomorrow, according to Mark Melio, of Melio & Company, Trinity's financial advisor.
"We decided we didn't want to price into a market that was dislocated and trading away from us," Melio said. "The quality of the credit for Trinity wasn't being reflected in the credit spreads."
The finance team originally expected to see a 50 to 65-point basis point spread to the MMD, Melio said. As of Tuesday, that expected spread rose another 25 basis points.
Of the $1.1 billion offering, $650 million is refunding and $500 million is new money. Trinity plans to hold the deal until yields fall, said Melio.
"We have a lot of time," Melio said. "Once the market stabilizes and we get back to credit spreads that reflect Trinity's AA, we'll be back."
Bank of America-Merrill Lynch is the senior manager on the tax-exempt piece and Goldman, Sachs & Co. the senior manager on the taxable piece.
The yield on the muni 10-year benchmark general obligation bond rose from three to five basis points Wednesday after climbing on Tuesday by six basis points to 1.80%, according to a recent read of Municipal Market Data's triple-A scale. The yield on 30-year GOs was up from four to six basis points on Wednesday after rising nine basis points to 2.59% on Tuesday.