Tuscany Seeks Low 10s

Tuscany International Drilling is out with initial price thoughts of low 10%-area as it prepares to price a $200m 2019NC4 bond this week. The Canada-based land drilling services provider predominantly operating in LatAM has wrapped up fixed-income meetings in Canada, Latin America and the US and is expected to price Thursday or Friday. The notes will be guaranteed by five of Tuscany’s subsidiaries and proceeds will be used to repay all senior secured term loans outstanding under its existing credit facility and for general corporate purposes. With lack of LatAm drilling comps and with US drillers trading at 6%-8%, the deal is expected to be an exercise in price discovery, though investors may look to comp the B/B+ borrower against non-drilling high-yield LatAm corps like BB minus/BB minus sugar, ethanol and bioenergy producer Usina Sao Joao Acucar e Alcool (USJ) which priced a $275m 2019 NC4 bond at 10.125% earlier this month that is now trading around 9.56%-9.70%. Approximately 60% of Tuscany’s fleet is concentrated in Colombia and Brazil. Credit Suisse and Scotia are managing.