The Wall Street Journal - 07.04.2020

A8| Tuesday, April 7, 2020 ***** THE WALL STREET JOURNAL.

ported entities and starting

new programs to buy higher-

rated corporate bonds.

“The liquidity side is being

fixed,” said Michael Collins, a

senior portfolio manager at

PGIM Fixed Income.

Investors said the Fed’s

main goal remains simple: to

hold down borrowing costs

across the economy, so indi-

viduals, businesses and com-

munities are encouraged to

borrow and spend money. But

that has proved challenging in

recent weeks, pushing the cen-

tral bank to take ever-more-

aggressive and creative ac-

tions.

Shortly after the central

bank reduced the key interest

rate it controls to near zero on

March 15, yields on longer-

term U.S. Treasurys shot up-

ward, with the 10-year yield

climbing to 1.259% from 0.5%

the previous week. The extra

yield, or spread, investors de-

mand to hold ultrasafe mort-

gage bonds over Treasurys

jumped to around 1.75 per-

centage points, according to

Tradeweb. That is compared

with 1.52 percentage points

just before the rate cut and

less than 0.3 percentage point

a week earlier.

In both cases, investors said

the moves were fueled by

money managers rushing to

raise cash by selling what they

could: ultrasafe debt. That

contributed to deteriorating li-

quidity, as dealers demanded

more compensation to stand

in the middle of trades.

One measure of the Fed’s

recent success is that the 10-

early indications that lock-
downs in the U.S. and Europe
might be helping slow the cor-
onavirus pandemic. In recent
weeks, investors have taken
grim economic data in stride,
betting that prices of stocks
and bonds now more appropri-
ately reflect the likelihood of a
sharp economic contraction.
Few are celebrating just
yet. The Dow industrials re-
main down about 20% this
year and debt markets are far
shakier than they were about
a month ago. Most new bond
sales are still coming from
well-established companies
with higher credit ratings. Li-
quidity, or the ease with which
investors can buy and sell se-
curities at what they think are
market prices, remains poor in
some riskier corners of the
market. Some worry condi-
tions could quickly deteriorate
again if the economic outlook
darkens further.
Still, investors and analysts
said the Fed’s historic inter-
ventions have spurred a mean-
ingful reduction in market
stress. Those steps include an-
nouncing plans to buy unlim-
ited amounts of government
bonds and mortgage securities
issued by government-sup-

ContinuedfromPageOne

the hospital door, trying fu-

tilely to keep close to their

dogs and cats and 6 feet away

from each other. Now staff are

shooing owners back to their

cars or to empty sidewalks

outside of closed businesses

nearby.

Inside the hospital, vets

have turned the lunchroom and

conference room into work ar-

eas to spread themselves out.

Dr. Klippen moved her com-

puter into an examination

room.

She commutes from Silver

Spring, Md., where she lives

with a 5-year-old son and two

lazy cats. “We’re anxious be-

cause we’re continuing to put

ourselves at risk and our fami-

lies at risk to be able to pro-

vide essential services,” said

Dr. Klippen.

The Veterinary Medical As-

sociation Executives, a trade

group, sent a survey in March

asking vet hospitals nation-

wide to report how long they

can continue to practice with

existing stocks of masks,

gloves, gowns and other per-

sonal protective equipment.

The group wants to make sure

vets aren’t left out when the

government divvies up safety

gear among doctors, nurses,

paramedics and other essential

workers.

Friendship has already de-

cided not to waste protective

equipment on “your routine,

garden-variety vomiting and

diarrhea patients,” said Dr. Ja-

nine Calabro, director of emer-

gency services. Technicians no

longer don gloves to adminis-

ter rabies vaccines or draw

blood, although the staff still

gloves up when treating dogs

with leptospirosis, which can

infect humans.

“Just like with the human

hospitals, there’s going to be a

breaking point,” said Dr. Klip-

pen. “Everybody is trying to do

their best.”

Emergency vets say one of

the things that hurts most is

the lack of personal contact

with pet owners. Dr. Calabro,

44, says during normal times,

she watches an owner’s body

language and facial expressions

when she explains a dog or

cat’s prognosis. She can read

whether the owner under-

stands the flurry of informa-

tion. Harder to do over the

phone.

The worst is when the news

is bad. On a recent Friday, Dr.

Klippen examined a dog that

had collapsed at home with a

catastrophic abdominal infec-

tion. The owner remained out-

side while Dr. Klippen, calling

from the office line, told her

that her dog would suffer if

not euthanized. Normally dur-

ing euthanasia, Dr. Klippen and

family members are side-by-

side, at a table or on the floor,

so close they touch as she in-

jects a sedative and then a

drug to stop the animal’s heart.

She often hugs family members

when it’s all over.

Now Friendship allows just

THE CORONAVIRUS PANDEMIC

one family member inside to

keep the pet company as it

dies. The hospital has set aside

the largest exam room for eu-

thanasia procedures to allow

doctor and owner as much dis-

tance as possible between

them.

On that Friday, the owner

cradled her dog on the exam

table as Dr. Klippen, wearing a

gown, stood apart and pushed

the drugs into an intravenous

line. Dr. Klippen said she asked

the owner to step aside while

she placed the stethoscope on

the dog’s chest and listened for

the final heartbeat.

As alarm spread over the

shortage of ventilators in hu-

man hospitals, veterinarians

talked among themselves

about handing over their ma-

chines to the humans. People

and animals use the same kind

of ventilators.

Dr. Beth Davidow, incoming

president of the American Col-

lege of Veterinary Emergency

Critical Care, started a list of

vets who have lent out their

ventilators, pledged their ma-

chines to human hospitals, or

offered to do so if asked. More

than 200 veterinary hospitals

in the U.S. and Canada have

signed on; at least seven veter-

inary ventilators are already in

use in New York or New Jersey

intensive-care units.

Friendship cleaned up its

$10,000, refurbished ventilator

over a week ago and took it

out of service, to be ready for

any local hospital in need.

Still, it wasn’t a hard call,

choosing people over pets.

Said Dr. Calabro: “Humans are

animals, too.”

WASHINGTON—Veterinar-
ian Christine Klippen cries in
the car pretty much every day.
Maybe it’s because anxious
owners aren’t allowed inside
Friendship Hospital for Ani-
mals anymore to watch her
care for their sick pets. Maybe
it’s because her hospital
packed up its ventilator to lend
to a human hospital, should
the coronavirus pandemic
overwhelm Washington, D.C.’s
medical system.
On a recent drive home, it
was definitely because that day
she had to tell a woman by
phone—a woman just outside
of the hospital’s closed doors—
that her dog wasn’t going to
make it.
These weren’t hard medical
decisions. Keeping owners out-
side to protect them from the
staff and the staff from them.
Giving up the ventilator and
choosing human life over ani-
mal life.
But those moments are driv-
ing home to Dr. Klippen, a 38-
year-old emergency veterinar-
ian, just how the pandemic is
eroding her ability to care for
pets and the owners who love
them.
“I have to meet people when
they’re scared and sad, when
things aren’t going well,” she
said. “That human connec-
tion—I didn’t realize how much
I need that not only to relay in-
formation, but to show some-
one that I have compassion for
their situation and their pet.”
Veterinarians say the virus
doesn’t appear to seriously af-
fect pets, although a tiger at
the Bronx Zoo has fallen ill
with Covid-19, and Hong Kong
has quarantined the pets of
sick people after a dog there
tested positive.
Friendship offers 24-hour
emergency care and oncology,
nephrology, dermatology and
other specialty services in the
well-to-do Upper Northwest
area of Washington, D.C. The
city last week imposed a stay-
at-home order, on top of a pre-
vious edict closing nonessen-
tial businesses, to slow the
spread of coronavirus.
Police stopped one Friend-
ship emergency veterinarian
walking to work for the night
shift last week. Hospital staff
carry letters explaining that
vets are essential workers.
The hospital has put its own
safety measures in place. Most
owners hand their pets over to
a Friendship technician curb-
side through the car window or
door. Those arriving on foot
check in at an outdoor tent and
pass their dogs or cats to staff
members inside the building.
During the early days of the
crisis, worried family members
gathered on benches outside of

BYMICHAELM.PHILLIPS

Veterinarians Face Trying Times

Animal hospitals are

changing practices,

giving ventilators to

human ones

Friendship Hospital for Animals in Washington, D.C., has readied its ventilator to lend to humans; the virus has changed vet practices.

FROM TOP: JANINE CALABRO; MICHAEL M. PHILLIPS/THE WALL STREET JOURNAL

From small-town Vermont

to Los Angeles, local govern-

ments are commandeering

shut-down hospitals to add

space amid the coronavirus

pandemic—a trend that could

revamp the market for health-

care facilities.

Just months ago, St. Vin-

cent Medical Center in Los An-

geles and Astria Regional

Medical Center in Yakima,

Wash., were closed, unable to

bring in enough revenue to

stay afloat. Both are poised to

reopen with the help of state

funds and, in the case of St.

Vincent, $135 million from the

family foundation of Patrick

Soon-Shiong, the billionaire

owner of the Los Angeles

Times.

In Vermont, a bankruptcy

court pulled back from the

brink one of many hospitals

facing a financial squeeze

from the drop-off in lucrative

surgeries that are critical to

their bottom lines.

In West Virginia, a govern-

ment-funded community

health-care group stepped in

with a deal that will save criti-

cal beds at another bankrupt

small hospital.

These hospitals’ rebirth

comes as health-care facilities

are being pushed to their lim-

its by the pandemic. As medi-

cal centers across the U.S. pre-

pare for an influx of hundreds

of thousands of new patients,

President Trump is expected

to use a federal stimulus pack-

age to pay hospitals that treat

uninsured people infected with

the new coronavirus.

Bankruptcy judges are act-

ing quickly on creative ar-

rangements that allow public

officials to rescue health sys-

tems that could be pushed to

their limits by a surge in

Covid-19 cases.

Vermont has agreed to prop

up ailing Springfield Hospital,

in the southeast of the state,

with a loan approved in court

Thursday. Without the state

loan, Springfield could have

been forced to close due to a

drop-off in revenue as people

forgo elective medical care,

according to court papers.

“The global pandemic is

having a significant negative

impact on small rural hospi-

tals. Outpatient visits are dry-

ing up and nonessential proce-

dures are not taking place in

many of these hospitals,” said

Andrew Helman, a lawyer for

Springfield.

Springfield has 25 hospital

beds and another 12 beds in

its busy emergency room,

which logged 16,235 visits in

2018. The hospital also has
      testing and laboratory facili-
      ties, four ventilators and hun-
      dreds of employees.
      But pandemic rules against
      nonessential activity have
      squeezed the revenue streams
      at Springfield so badly that
      the hospital could have been
      forced to choose between
      making payroll and buying
      supplies, had Vermont not
      stepped in, court papers said.
      Losing out on revenue from
      outpatient and elective proce-
      dures, small rural hospitals
      are also looking at increased
      demand for emergency care
      due to the pandemic, Mr. Hel-
      man said. He said he has
      alerted the judge overseeing
      the bankruptcy turnaround ef-
      forts of Penobscot Valley Hos-
      pital and Calais Regional Hos-
      pital in Maine about the
      financial squeeze of Covid-19.
      “I have been working
      closely with states where my
      chapter 11 hospital clients are
      located to obtain necessary
      support,” Mr. Helman said.
      “These businesses need to stay
      open.”
      Pennsylvania health chief
      Rachel Levine said Wednesday
      the state is deciding whether
      to reopen Ellwood City Medi-
      cal Center, which was stripped
      of its license in February. The
      facility’s owner, Americore
      Health LLC, filed for chapter 11
      bankruptcy protection last
      year.

BYPEGBRICKLEY

States

Enlist

Troubled

Hospitals

Local governments

are commandeering

shut-down facilities

to add space.

year Treasury yield has fallen

back to 0.675% as of Monday’s

close. Another is that average

mortgage spreads have re-

cently been hovering around 1

percentage point. Put together,

the moves should push down

mortgage rates and hand more

money to homeowners who re-

finance their mortgages.

Just the promise of the Fed

buying corporate bonds has al-

ready provided a lift to larger

businesses.

Last week, companies out-

side the financial sector, in-

cluding Oracle, Dollar General

Corp. and General Mills Inc.,

sold a record $104 billion of

investment-grade bonds, beat-

ing the previous record of $

billion set the previous week.

In many cases, companies

have been selling bonds at

yields that were barely above

those on their existing bonds,

a sign of strong demand from

investors.

Five companies also issued

speculative-grade bonds,

kicked off by Pizza Hut owner

Yum Brands Inc., with the first

high-yield bond sale since

March 4.

In addition, cruise operator

Carnival—which is invest-

ment-grade but facing urgent

liquidity pressures after it

shut down operations—sold

$4 billion of secured bonds at

a hefty 11.9% yield.

The recovery has been

more mixed in other areas of

the credit market. The amount

of extra yield that investors

demand to hold securitized

debt—backed by everything

from student loans to aircraft

leases—instead of Treasurys

has generally declined in the

past two weeks. But investors

said there are large variations

even within sectors, depend-

ing on how vulnerable specific

borrowers are to the economic

downturn. And sales of new

asset-backed securities are

likely to be on hold until the

Fed starts up a program to

buy the highest-rated debt in

the asset class.

Central-bank support for

some short-term municipal-

bond prices helped pull the

market out of a major liquidity

crunch that brought state and

local government borrowing to

a standstill in mid-March.

Also helping: congressional

endorsement of a program

that would provide liquidity

for longer-dated maturities.

Prices rebounded sharply,

though they later fell again. Is-

suance of new bonds has in-

creased slightly but remains

around 10% of February levels,

according to Refinitiv.

A series of ratings-firm

downgrades over the course of

the past week reminded inves-

tors of many issuers’ vulnera-

bility. S&P Global reset its out-

look on Wednesday to

“negative” on all U.S. public-fi-

nance sectors. New York’s

Metropolitan Transportation

Authority has frozen new proj-

ects despite billions of dollars

in planned aid.

Some investors said there is

still more pain to come, re-

gardless of what the Fed can

do to calm markets.

—Heather Gillers

contributed to this article.

Credit

Markets

Steadier

Jan.

2019

Jan.

U.S.investment-grade

corporate-bondissuance,

weekly*

$

0

25

50

75

billion

June Jan.

2020

FederalReserve

ratecut

Ratecut

Extrayieldtoholdagency

mortgage-backedsecurities

overU.S.Treasurys

Sources: Tradeweb (yield); Dealogic (issuance)

*Excludes financial-sector businesses

2.0 pct. pts.

0

0.

1.

1.

Feb. March April