Digicel Group Ltd
Rating: Caa2/CCC+ (Moody's/Fitch)
Amount: $1bn
Maturity: 15 January 2015
Issue price: 100.00
Coupon: 8.875%
Spread at re-offer: 415bp over US Treasuries
Tranche 2: $400m PIK toggle
Maturity: 15 January 2015
Issue/re-offer price: 100.00
Call option: after three years
Coupon: 9.125%
Spread at re-offer: 440bp over US Treasuries
Launched: Thursday 22 February
Payment date: 27 February
Joint books: Citigroup, JP Morgan
Market appraisal:
"...this was quite an amazing deal for the emerging markets. We heard it attracted more than $7bn in demand, with half of the orders coming from high yield accounts in the US and Europe and the other half from emerging market dedicated accounts.
It traded down just a touch on the break. I think Denis O'Brien [telecoms entrepreneur at Digicel] really pushed on price. The deal looked aggressive even at the initial guidance level, let alone the revised guidance. But it seems like the high yield market just loves this guy and bought into the high growth story."
"...this deal tells me it is an incredibly hot market. This is a triple-C issuer with higher leverage than we have ever seen on a corporate in the emerging markets. There is just a lot of money out there looking for places to invest."
"...it was obviously an extremely aggressive deal in terms of pricing and also in terms of leverage.
At 8.5 times debt to Ebitda, it's about four times more leveraged than anything we have coming out of the Latin American region at least, although common in the high yield market. We heard the leads had about $7bn of orders and the emerging market investor/high yield investor split was about 50/50."
"...Denis O'Brien has a deep following in the high yield market and people just like him, trust him and in general people bought into the story in terms of its growth prospects and therefore the likelihood of rapid de-leveraging."
"...this deal would have come with a double digit yield if Denis O'Brien wasn't involved. If it was just a wireless company based in Jamaica with good growth prospects, it wouldn't have got anywhere near as tight a price as it did.
The fact that he has such a good following in the high yield market made this deal fly."
"...it traded a little below re-offer on the break, but not by much. With a deal of this size and this aggressively priced you'll see the Street try and short it on the break. But I expect this bond ultimately to be fine."
