The largest operator of health clubs in the U.S., Bally Total Fitness Corp., will soon place $155 million of floating-rate membership fee receivables-backed notes in the private markets, sources confirmed. Initially placed in its conduit facility, underwriter CIBC World Markets had the transaction rated last week in order for the transaction to be sold to investors.
The offering, named H & T Master Trust Series 2001-1, received a rating of Baa2 by Moody's Investors Service, four notches above the Ba3 corporate unsecured rating of Bally. The $1,000 up-front membership fee and the monthly payments from members make the cash flows closely resemble an installment-sales contract. Contracts typically last three years. The collateral, which averages a 35% default rate, is collateralized to a ratio of twice the expected defaults in the pool.