Rating: B3/B-
Tranche 1: Eu375m
Maturity: November 15, 2014
Issue price: 100.00
Coupon: 7.625%
Call option: at 103.813 from 15/11/09
Spread at re-offer: 381bp over the 4.25% July 2014 Bund
Tranche 2: $200m
Maturity: November 15, 2014
Issue price: 100.00
Coupon: 7.5%
Call option: at 103.75 from 15/11/09
Spread at re-offer: 343bp over the 4.25% August 2014 UST
Launched: Friday November 5
Joint books: Credit Suisse First Boston, Goldman Sachs, UBS
Bookrunner's comment:
CSFB ? The euro tranche is larger than the dollar tranche ?Europeans led the way in pricing and evaluating the credit, which is an interesting market development.
After Corus, this is the lowest coupon for a B3/B- rated company and the lowest coupon for a European leveraged buyout ever.
The reception from investors was incredibly strong and investors were comfortable with the name. Rockwood is a speciality chemical company and is a defensible credit.
The response from investors was shown in the final pricing of the trade. The initial price guidance was 7.45%-8% on the dollar tranche and 25bp behind in euros. This was refined to 7.5% on the dollar tranche and 12.5bp back in euros.
We looked at similar credits in the market. European comparables include Celanese and Cognis.
The company has substantial revenues, assets and liabilities in euros and the larger euro tranche matched the company's funding needs.
Secondary market performance has been strong ? the euro offering has traded above 102 and the dollar tranche above 103.
Goldman Sachs ? This deal went extremely well, and was one of the tightest LBO deals priced at this ratings level.
The bonds were priced well inside price talk levels on both tranches. The dollar tranche traded up to 103.25 in the aftermarket and we saw the same sort of performance on the euro tranche.
Market appraisal:
?...there is so much money chasing Rockwood that it will come at a tight level but price talk of 8%-8.25% is in line with the chemical market.
The firm is not exposed to oil prices and does not have exposure to any one particular type of raw material. It is highly leveraged but it also generates strong cashflow.?
