Grupo R Floats Bond in Choppy Waters

Mexican concession operator Grupo R has raised $270m in senior secured bonds via its RDS shipping vehicle. The 11.875% bonds priced at 97.131 to yield 12.500%. Because of the discount, the company opted to increase deal size by $10m from a planned $260m in order to secure sufficient net proceeds to cover the cost of operating a 5-year Pemex drilling contract. The notes are senior secured but are subordinated to a first-lien $225m 5-year bank facility. Some $170m in equity stands between creditors and bonds. The notes priced Wednesday and by late Thursday were already trading up around 3 points, hovering around par, say executives on the deal. The book for the B3/B minus deal was subscribed by more than 3x, they add. Grupo R is said to have been satisfied with the yield at reoffer, though the aftermarket performance suggests it may have been able to squeeze more out of a buyside that is seemingly enthusiastic about the issue. Market conditions have been challenging, with issuers seeking to avoid new launches. In the case of Grupo R, the deal has had to adhere to a tight issuance schedule because the concessionaire must have the funds on hand to pay for a new ship being built for the 5-year concession, which is scheduled to be delivered in March. Jefferies led the transaction.