CYH 8 03/15/26

Community Health Systems Inc

Credit, Healthcare


Presented:05/16/2019
Price:N/A
Cap:N/A
Current Price:$5.63
Cap:N/A

Presented

Date05/16/2019
PriceN/A
Market CapN/A
Ent ValueN/A
P/E RatioN/A
Book ValueN/A
Div Yield0%
Shares O/SN/A
Ave Daily VolN/A
Short IntN/A

Current

Price$5.63
Market CapN/A

Publicly traded companies mentioned herein: Community Health Systems Inc (CYH), Franklin Resources (BEN), HCA Healthcare (HCA), Tenet Healthcare (THC)

Highlights

The presenter sees a favorable risk/reward setup for a cap structure trade involving Community Health Systems’ first and second lien debt. The hospital system faces stiff headwinds, as the business appears to be in secular decline. A combination of a long position in the 2026 first lien debt, presently trading at ~96, and a short position in the 2024 second lien debt, at ~76, should yield a 7% - 10% return on capital (assuming a three-to-one ratio, long-to-short) over the investment horizon. In addition to limited downside risk due in part to the CYH 8 03/15/26 debt having a make-whole call provision at 117, there’s optionality on a “Weatherford-like” event (an unexpected bankruptcy filing would likely send the second lien debt to the 30s - 40s).

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Idea Discussion

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