Code Blue

These Hospital Bonds Are on Life Support

Health care companies are faltering, but debt investors don't seem to care.
Photographer: Spencer Platt/Getty Images
Lock
This article is for subscribers only.

Junk-bond buyers appear to have a blind spot when it comes to for-profit health care companies.

They've snapped up bonds of Tenet Healthcare Corp. and Community Health Systems Inc. despite the drastically souring outlook for both hospital operators. Some of this may be idiosyncratic or the result of specific investors' strategies (or unwillingness to sell). Franklin Resources Inc., for example, now owns nearly 20 percent of Community Health's total debt and more than half of its $1.9 billion of bonds maturing in 2019, according to recent filings compiled by Bloomberg.