Since early 2022, distressed investors have watched their opportunity set expand to levels not seen in years. Within that set, the healthcare sector of the leveraged debt markets — represented by the Morningstar US High-Yield Bond Index and the Morningstar LSTA US Leveraged Loan Index — has offered more distressed bonds and loans to choose from than any other sector. What has caused Healthcare to overrepresent in distressed? PitchBook took a deep dive to find out.
Healthcare, as of Jan. 25, was the Morningstar US High-Yield Bond Index’s third-largest sector by par value, at $113.5 billion out of a total index of $1.4 trillion. Of the 18 individual sectors in the index, Healthcare held the largest collection of bonds with option-adjusted spreads (OAS) of 1,000 bps or more, the standard starting point for distress. The sector held $24.7 billion of distressed paper, with 36 out of its 134 issues marked at distressed prices. Read more.
