LifePoint slides with downgrade; MoneyGram changes emerge; Fortrea, RxBenefits on deck

By Sara Rosenberg

New York, May 31 – In the secondary market on Wednesday, LifePoint Health Inc.’s term loan softened following downgrades of the company’s ratings by Moody’s Investors Service, while Parkway Generation LLC’s strip of term loan B and term loan C debt held steady after ratings were cut by S&P Global Ratings.

Meanwhile, in the primary market, MoneyGram International Inc. reduced the size of its first-lien term loan B and modified the original issue discount, and Fortrea and RxBenefits Inc. (RXB Holdings Inc.) joined this week’s new issue calendar.

LifePoint dips

LifePoint Health’s term loan fell to 87¾ bid, 88¾ offered on Wednesday from 89¼ bid, 90¼ offered on Tuesday as the company’s corporate family rating was cut to B3 from B2, senior secured term loan and senior secured notes rating was cut to B2 from B1 and senior unsecured rating was cut to Caa2 from Caa1 by Moody’s, a market source said.

The outlook was revised to stable from negative.

Moody’s said that the downgrade reflects the expectation of elevated financial leverage through 2024. The company’s debt/EBITDA rose to about 8.2x at the end of March 30, primarily as a result of a surge in operating expenses including elevated labor costs and increased spending on new facilities associated with acquisitions completed in 2023, the rating release explained.

LifePoint is a Brentwood, Tenn.-based operator of general acute care hospitals, community hospitals, regional health systems, physician practices, outpatient centers and post-acute care facilities.

Parkway Generation steady

Parkway Generation’s term loan B and term loan C strip was quoted at 96¾ bid, 97¼ offered, unchanged on the day, following a downgrade on the senior secured debt to B+ from BB from S&P, according to a trader. The rating was removed from CreditWatch.

The downgrade was attributed to performance penalties assessed by the Pennsylvania-New Jersey-Maryland Interconnection reducing Parkway Generation LLC’s ability to sweep against its term loan B.

S&P expects the company will have about $790 million outstanding on its term loan B at maturity in February 2029, compared with the $660 million that was expected before the $141 million net penalty, of which S&P anticipates $41 million to be successfully contested.

Parkway Generation is a portfolio of natural gas-fired power generation facilities.

MoneyGram revised

MoneyGram scaled back its seven-year first-lien term loan B (B2/B/B+) to $400 million from a revised amount of $450 million and an initial size of $500 million, changed the original issue discount to 83 from 92 and made some revisions to documentation, according to a market source.

As before, the term loan is priced at SOFR plus 550 basis points with a 0.5% floor, and has 101 soft call protection for one year and no CSA.

Goldman Sachs Bank USA, Barclays, Deutsche Bank Securities Inc. and Wells Fargo Securities LLC are leading the deal that will be used with $500 million of senior secured notes, upsized from a revised amount of $450 million and an initial size of $400 million, and cash and equity contributions to fund the buyout of the company by Madison Dearborn Partners LLC for $11.00 per share in an all-cash transaction valued at about $1.8 billion.

Closing on the buyout is expected on or before June 1.

MoneyGram is a Dallas-based digital P2P payments company.

Fortrea readies deal

Fortrea emerged with plans to hold a lender call at 10 a.m. ET on Thursday to launch $1.52 billion of credit facilities, a market source remarked.

The facilities consist of a $450 million revolver, a $500 million term loan A and a $570 million term loan B, the source added.

Goldman Sachs Bank USA and Barclays are leading the deal that will be used with $570 million of other secured debt to fund the spin-off of the company from Labcorp, under which Fortrea will make an expected $1.605 billion cash distribution to Labcorp as partial consideration for the assets that will be contributed in the spin-off.

Closing is expected mid-year, subject to certain customary conditions.

Fortrea is a Durham, N.C.-based contract research organization providing comprehensive phase I through IV biopharmaceutical product and medical devices services.

RxBenefits joins calendar

RxBenefits set a lender call for 11 a.m. ET on Thursday to launch a non-fungible $150 million add-on first-lien term loan due Dec. 18, 2027, according to a market source.

Commitments are due at 5 p.m. ET on June 14, the source added.

Barclays, Deutsche Bank Securities Inc. and Goldman Sachs Bank USA are leading the deal that will be used with balance sheet cash to repay an existing second-lien term loan.

Advent International and Great Hill Partners are the sponsors.

RxBenefits is a Birmingham, Ala.-based pharmacy benefits optimizer for the employee benefit industry.

Fund flows

In other news, actively managed loan fund flows on Tuesday were negative $47 million and loan ETFs were unchanged, market sources said.

Actively managed high-yield bond fund flows on Tuesday were negative $12 million and high-yield ETFs were positive $127 million, sources added.

Loan indices rise

IHS Markit’s iBoxx loan indices were stronger on Tuesday, with the Leveraged Loan indexes (MiLLi) closing out the day up 0.09% and the Liquid Leveraged Loan indices (LLLi) closing out the day up 0.10%.

Month to date, the MiLLi is down 0.14% and year to date it is up 3.91%, and the LLLi is down 0.59% month to date and up 3.85% year to date.

Average secondary market bids in the U.S. on Tuesday were 90.93, down 0.02% from the previous day and down 1.03% year to date.

According to the IHS Markit data, some of the top advancers on Tuesday were Juice Plus+’s November 2018 term loan at 47.67, up from 45, Packers Sanitation Services/PSSI’s March 2021 covenant-lite term loan at 43.93, up from 42.82, and New Trojan/Careismatic’s January 2021 covenant-lite term loan at 61.33, up from 60.5.

Some top decliners on Tuesday were Heritage Power’s July 2019 term loan at 29, down from 30.13, American Tire Distributors’ October 2021 covenant-lite term loan B at 83.86, down from 85.91, and Iris Holdings’ June 2022 covenant-lite term loan at 84.5, down from 86.2.

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