CAM High Yield Weekly Insights

Fund Flows & Issuance: According to Wells Fargo, flows week to date were $0.8 billion and year to date flows stand at -$0.5 billion. New issuance for the week was $4.2 billion and year to date HY is at $97 billion.

(Modern Healthcare) Some hospitals want to end mandatory bundled pay programs

• Several hospitals have called on the CMS to turn bundled-payment initiatives for cardiac and orthopedic care into voluntary programs, as they don’t have the financial resources to invest in the changes.
• The bundled-payment initiatives pose a serious hardship for safety net hospitals that rely mostly on the Medicare, Medicaid and disproportionate-share hospital payments, according to the Greater New York Hospital Association.
• “Medicare and Medicaid rates no longer cover an adequate level of operating and capital costs, and the resulting lack of margins for safety net hospitals does not allow for capital investment,” the trade group said in an April 19 comment letter.
• Pennsylvania-based Geisinger Health System said it is against making the models voluntary, as some hospitals may game the system by selectively referring or transferring complex patients to providers not participating in the model.
• The American Hospital Association said it supported the models’ overall goal to make providers more accountable for coordinating patients’ care. However, it has voiced concerns in the past over the CMS’ pace of rolling out the models. The AHA supports an implementation delay through Jan. 1, 2018. However, the agency should not delay the models beyond that, the group said.

(Globe Newswire) PULTEGROUP, INC. REPORTS FIRST QUARTER 2017 RESULTS

• “Reflecting our increased business investment over the past few years and the ongoing execution of our Value Creation strategy, PulteGroup delivered another quarter of significant operating and financial gains that drove a 17% increase in earnings to $0.28 per share,” said Ryan Marshall, President and CEO of PulteGroup. “Consistent with our focus on delivering superior returns over the housing cycle, we continue to realize strong operating margins, improve our asset efficiency and return excess funds to our shareholders.”
• “Buyer interest during the spring selling season of 2017 has been high and points to the ongoing strength in recovery for the housing industry,” added Marshall. “Strong buyer demand continues to be supported by an improving economy and resulting employment and wage gains, high consumer confidence, a low inventory of new and existing homes, and the powerful demographic forces of Millennials and Baby Boomers. Given the strength of our land pipeline and our disciplined investment practices, PulteGroup is well positioned to grow its market presence and improve its financial performance within this operating environment.”
• Home sale revenues for the first quarter totaled $1.6 billion, an increase of 14% over the prior year. Higher revenues for the quarter were driven by a 7% increase in closings to 4,225 homes, in combination with a 6% increase in average selling price to $375,000.
• PulteGroup’s backlog at quarter end totaled 9,323 homes valued at $3.8 billion, compared with prior year backlog of 8,755 homes valued at $3.4 billion. The average sales price in backlog of $408,000 is up 6% over the prior year and reflects the ongoing shift in both the mix of homes sold toward more move-up product and toward higher prices within the buyer category.

(Reuters) Trump’s plan to slash business taxes seen as ‘guidepost’

• President Donald Trump unveiled a one-page plan proposing deep U.S. tax cuts, many for businesses, that would make the federal deficit balloon if enacted, drawing a cautious welcome from fiscal conservatives and financial markets.
• Trump’s package fell far short of the kind of comprehensive tax reform that both parties in Washington have sought for years
• Investors, who had been awaiting tax-plan details for months, largely shrugged off the news, with many saying it was still short on specifics and faced a long road to enactment.
• House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell and the top Republicans on the congressional tax-writing committees welcomed the Trump proposals, while leaving space for details to change as legislation evolves.
• “The principles outlined by the Trump administration today will serve as critical guideposts” as Congress and the administration work on tax changes, they said in a statement.

(PR Newswire) Graphic Packaging Holding Company Reports First Quarter 2017 Results

• Graphic Packaging reported Net Income for first quarter 2017 of $37.0 million. This compares to first quarter 2016 Net Income of $57.5 million.
• “Our first quarter Adjusted EBITDA was lower as expected at $161 million compared to $193 million in the prior year period. Net sales were up 2.7%, reflecting recent acquisitions and stable core volumes, consistent with the trends we experienced in 2016. Operating efficiencies improved during the quarter and we successfully upgraded two headboxes on the number six paper machine at our West Monroe, Louisiana mill” said President and CEO Michael Doss. “The quarter was negatively impacted by accelerating commodity input costs, primarily recycled fiber, and the planned downtime costs associated with the upgrade of the two headboxes.”
• “We are executing price increases to offset the unprecedented recycled fiber input cost inflation we are experiencing and expect margins to improve from our pricing actions during the second half of 2017, and in 2018. Our focus on meeting cash flow commitments, growing cash flow, and returning more of it to stockholders over time has not changed.”