HY Comeback Limps Over Finish Line

Jamaican telecom Digicel has closed books on its 2014 NC3 dollar bond offer at $335m, after picking up a few additional orders Monday following a closing of books Friday. The transaction comes up $100m short of the announced amount, but still earns it the distinction of the region’s first high-yield issue since July. It priced the 12% notes at 89.601 to yield 15%, after giving 15% area guidance Friday morning. The B1 rated transaction through the Digicel Limited unit drew orders from high-yield and EM investors in the US and Europe, according to a banker managing the sale. Investors and bankers away from the deal had expected the bond to price in the 14%-15% range, based on trading levels of the existing 2012s and 2014s in the low-to-mid teens. Bankers away from the deal say it is encouraging that it was completed. But thin demand shows that investors are not yet confident in the region’s high-yield issuers, and will continue to be extremely demanding. 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.