PNC Healthcare Capital Markets Update:
Second Quarter 2018

Municipal Volume Continues to be Light

Market Overview

PNC Healthcare Capital Markets offers debt-based structures and products. Healthcare clients rely on PNC Capital Markets for underwriting, selling and trading bonds.

Healthcare tax-exempt municipal volume continues to be light for 2018. Healthcare municipal issuance through May 2018 is down approximately 23% versus the same period last year. (source: Thomson Reuters – SDC Platinum)  Lighter issuance is most likely the result of the acceleration of intended 2018 bond issues into late 2017 in light of proposed tax reform and the elimination of tax-exempt advance refundings in 2018. The majority of the issuance of municipal securities in 2018 is for new money projects. However, several large transactions have skewed the data. The top five publically offered transactions accounted for 51% of total issuance during this period. 

Healthcare capital market transactions that have come to market have been well received and priced at attractive levels. Still evolving in the market is the refunding of bank direct placement loans with variable rate demand bonds (VRDBs) supported by letters of credit, standby bond purchase agreements or self-liquidity. As more borrowers face interest rate increases with their bank loans due to the corporate tax law’s reduction in corporate income tax to 21% from 35%, we will most likely see an increase in VRDB market volumes.   - Chris Tucker, Managing Director

Summary of Healthcare Issuance (as of June 1)
Tax Exempt
Rating # Deals Total Par ($MM) Average Yield %(Final Maturity) Average YTM % (Final Maturity) Average Spread to MMD (bps) Average YTM Spread (bps)
AA 11 1,558.87 3.39 3.93 +65 +110
A 13 1,741.55 3.58 4.15 +78 +132
BBB 1 911.245 4.43 4.81 +140 +195
Taxable (Corporate issuance included)
Rating # Deals Total Par ($MM) Average Yield %(Final Maturity) Average Spread to UST (bps)  
AA 3 1,150.00 3.98 +98  
A 5 1,506.14 4.21 +117
BBB 2 223.28 5.82 +150

Above is a table summarizing fixed-rate publicly offered negotiated deals in 2018 (Bloomberg).

Information on PNC Healthcare Capital Markets wins is provided below:

PNC Participation Year-to-Date
Co-Senior and Co-Managed Bond Issues
Closing Date Borrower Series/Description Coupon Par ($MM)
2/21/2018 Community Health Network IN Series 2018 Fixed 202.000
3/21/2018 Mount Nittany Medical Center PA Series 2018A and B Fixed 67.200
6/6/2018 Ballad Health TN Series 2018A and B Fixed & Variable 657.100

Thomas Timlin
Capital Markets Associate
PNC's Not-For-Profit (NFP) Healthcare Capital Markets Group

thomas.timlin@pnc.com

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