HY Comeback Fails to Impress

Jamaican telecom Digicel had booked some $300m of its $435m 2014 dollar bond issue as of late Friday. Despite there being room to grow before the transaction closes Monday morning, it is expected to fall well short of the targeted amount. The 12% coupon notes were priced at approximately 89 to yield 15%, according to a banker managing the sale. Though set to be smaller than the planned $435m announced at the beginning of last week, the B1 rated deal through the Digicel Limited unit earns the distinction of the region’s first high-yield issuer in 8 months. After a week of haggling during a roadshow targeting high-yield investors, the issuer came out with 15% area guidance Friday morning, according to investors, after testing appetite at 14% during the week. Though very challenging in this environment, investors say the bond was generally more appealing than that of last week’s fellow high-yield issuer Cemex, given a clearer story and more certainty over how the company will handle additional leverage. Digicel is raising funds for working capital and the purchase of a $260m equity stake in its Digicel Central America unit from the company’s main shareholder, chairman and founder Denis O’Brien. Citi, Credit Suisse and JPMorgan managed the transaction. The last LatAm high-yield deal was B+ rated Mexican marine contractor Oceanografia, pricing in July a $335m 11.25% 2015 bond to yield 11.50%, via Morgan Stanley.