Moody’s believes the refunding risk for the US healthcare industry will be low over the next five years as investor appetite returns.

Between 2010 and 2014, 88 rated issuers in the US healthcare sector will face $106 billion of refunding requirements – including $63 billion in speculative-grade credit facilities and bonds as well as $43 billion in investment-grade bonds. Maturities for the healthcare issuers are back-end loaded – as they are for most U.S corporate issuers — with about $89 billion, or 84%, of the $106 billion total maturities coming due in 2012-2014.

We currently believe the refunding risk for these companies is relatively low given the modest rating-specific risk. In addition, investor appetite has returned, and we believe this trend should continue.

Healthcare issuers have already lowered their 2010-2014 refinancing needs by $5.6 billion (10%) in the last six months, signifying companies’ ability to access the debt capital markets.

Compared to last year, healthcare sector new issuance in the first quarter of 2010 has been particularly strong among speculative-grade issuers. A total of $5 billion of high yield bonds were rated in the first quarter of 2010 compared to $1.7 billion in the first quarter of 2009.

Speaking to the recovery in the leveraged loan market, healthcare companies have been successful in accessing the market by issuing $4 billion of credit facilities in the first quarter of 2010 versus a total of $6 billion in 2009.

From Moody’s Refunding Risk and Needs for U.S. Healthcare Industry Issuers, 2010-2014 (Premium)

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