Gainwell Technologies, a US healthcare software provider for government programs, is in discussions with investors to refinance nearly US$5.7 billion of leveraged loans, according to people with knowledge of the matter.

If completed, it would be the biggest such refinancing in the US software sector this year.

JP Morgan Chase & Co. is working on plans that could replace about US$4.2 billion of first-lien debt with a high-yield bond and leveraged loan sale.

About US$1.5 billion of second-lien debt could be refinanced with existing lenders, the people said.

Gainwell was carved out of DXC Technology’s US state and local health and human services business in 2020 in a US$5 billion sale to Veritas Capital, and it gets most of its revenue from long-term contracts with Medicaid agencies.

The talks come as technology borrowers face a tougher loan market, with about US$92 billion in leveraged loans due by 2028.

Moody’s Ratings said in June that Gainwell faced elevated refinancing risk because its first-lien loan matures next year. Moody’s rates Gainwell at Caa1 and previously cited about 8x pro forma leverage.

The ratings agency also said Gainwell is the primary Medicaid Management Information Systems provider in 30 states and territories.

🔗 Source: Bloomberg