Surprise billing bill pressures air ambulance and physician staffing issuers, high yield energy spikes after Iranian drone shot — Mid-Day Commentary

Air ambulance operators and physician staffing issuers’ debt fell this morning as the market digested Tuesday’s Senate Health Committee hearing on the Lower Health Care Costs Act of 2019, according to two buysiders and two sellsiders.

The legislation was introduced to the Senate Health Committee by Chairman Lamar Alexander (R-Tenn.) and Ranking Member Patty Murray (D-Wash.).

The bill targets surprise billing from air ambulance companies and ER doctors. For the latter, insurance companies would be required to pay out-of-network doctors for care using a median in-network fee. The committee will vote on the legislation on 26 June.

“With this bill, hospitals can’t charge extra fees for things like out-of-network doctors or services like air lifting patients, and these fees are usually astronomically higher than in-network costs,” one of the sellsiders said.

The proposal dragged down bonds for a number of issuers, sources continued.

Global Medical Response’s (fka Air Medical Group) USD 370m 6.375% senior unsecured notes due 2023 traded today at 90.25 to yield 9.422%, down from a trade at 95.125 to yield 7.846% on 17 June, according to MarketAxess.

Air Methods’ USD 500m 8% senior unsecured notes due 2025 traded today at 65.063 to yield 17.805%, down from trades at 66-67 yesterday, according to MarketAxess.

Envision Healthcare’s USD 1.225bn 8.75% senior unsecured notes due 2026 fell today to trade at 75 to yield 14.38%, down three points from a trade of 78 Wednesday (19 June) morning, according to MarketAxess.

TeamHealth’s USD 865m 6.375% senior unsecured notes due 2025 traded at 80.25 to yield 11.2%, after falling about two points from 82.5 Wednesday morning, according to MarketAxess.

The news comes as both staffing companies are coming off downbeat 1Q19 earnings performance. For 1Q19, Envision reported an 18% YoY decline in adjusted EBITDA, while Team Health booked a 10% fall.

High yield energy names are moving up in the secondary market after oil prices jumped nearly 2.8% following the news that Iran shot down a US drone Thursday morning along the Strait of Hormuz, said two buysiders.

California Resources’ USD 2.07bn 8% senior unsecured notes due 2022 jumped nearly three points to 72.5 to yield 19.203% from trades yesterday at 69.5 to yield 20.718%, according to MarketAxess. The company’s stock is traded today at USD 19.15 per share and a market cap of USD 934.52m, up 5.34% from yesterday’s close.

Superior Energy’s USD 500m 7.75% senior unsecured notes due 2024 rose three-and-a-half points to USD 63.5 to yield 19.076% from USD 60 yesterday to yield 20.569%, according to MarketAxess.

2019 Debtwire

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