S&P Market Intelligence – bless them – are keeping track of when leveraged companies are drawing on their Revolvers, at a time when i) having a Revolver is a Good Thing ; ii) drawing down funds is both reassuring and worrying. Mostly the latter. Anyway CityMD, a healthcare company, has drawn $50mn on its $150mn Revolver line.
To date, the company has been rated CCR 2, but we’re using this opportunity to add CityMD to the Underperformers list out of an abundance of caution. (That’s a term we’ll be over-using the months ahead). The hospital – which undertook a mostly debt financed merger in the summer – must be in the line of fire given what’s happening to all health care companies, and especially due to its being located in New York. Reasons enough to worry and downgrade to a CCR 3. Still, the company was rated B- after the merger by S&P itself. (BTW, that’s a high corporate credit rating in our neck of the leveraged loan universe).
The only BDC with exposure is THL Credit (TCRD), which only booked its position in the 2026 Term Loan in the IVQ 2019. That seems to have been part of the BDC’s attempt to reposition itself in “safer” credits. This loan only pays LIBOR + 450 bps. We’ll have to see if that pays off in this situation.