On November 10, 2022, RBCCM served as sole placement agent on a $600,000,000 Section 4(a)(2) taxable private placement for City of Hope (COH). The par amount was split between $132.5 million 5-year taxable bullet, $175.0 million 10-year taxable bullet, $100.0 million 25-year taxable weighted average life and $192.5 million 30-year taxable bullet. The proceeds from the issuance will be used for general corporate purposes. The transaction was initially unrated and assigned ratings by Moody’s & S&P in Q2 2023.
RBCCM, acting as sole placement agent, included a broad spectrum of buyers in a negotiated sale process, ultimately allotting the notes to 6 investors across 4 tranches with 5-to-30-year terms. The private placement market offered incremental flexibility to interface with investors given COH is in the midst of a merger integration and implementation plan. All investors subsequently agreed to accept the amended and restated Master Trust Indenture that will eventually result in more favorable terms and covenants for COH.
The transaction priced on the day of the October 2022 Consumer Price Index print, which saw the largest single-day decline in the 10-year UST yield since March 18, 2009. Incorporating the termination of treasury rate locks, COH’s transaction carried a 5.24% all-in cost on a 17.7-year average life.
This transaction furthers RBCCM’s #1 ranked not-for-profit . U.S private placement franchise. RBCCM has led 6 of the last 7 inaugural health system 4(a)(2) private placements totaling over $2.1bn. *
Summary of Terms
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Maturity: |
Nov. 15, 2027 |
Nov. 15, 2027 |
Nov. 15, 2032 |
Nov. 15, 2052 |
Nov. 15, 2052 |
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Structure: |
5-Yr Bullet |
5-Yr Bullet |
10-Yr Bullet |
30yr F / 25yr WAL |
30-Yr Bullet |
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Tranche Size: |
$57,500,000 |
$75,000,000 |
$175,000,000 |
$100,000,000 |
$192,500,000 |
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Coupon: |
5.81% |
5.81% |
5.90% |
6.14% |
6.34% |
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Closing Date: |
Dec. 15, 2022 |
Jan. 18, 2023 |
Dec. 15, 2022 |
Dec. 15, 2022 |
Dec. 15, 2022 |
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Client Overview
City of Hope is a national cancer research and treatment system focused on treating patients with cancer, diabetes, and other life-threatening diseases. Beginning with its National Cancer Institute-designated comprehensive cancer center in the greater Los Angeles area, COH has grown to consist of over 30 clinical locations in the greater Los Angeles area, is building $1 billion campus in Orange County, California and recently acquired three locations from Cancer Treatment Centers of America (Atlanta, Chicago, and Phoenix). All of which gives COH a national footprint in diverse geographies, scale to accelerate cutting-edge research, clinical trials and data acquisition, and an award-winning patient-centered care model.
*Source: Bloomberg