High-yield ploughs on through volatility


LONDON, Nov 3 (IFR) - Europe's high-yield bond market displayed signs of strength on Thursday as French car parts maker Faurecia said it was increasing the size of its debut bond despite one of the most volatile days in recent months.

The Ba3-rated company, owned by Peugeot, delivered a strong sign that cash-rich investors are prepared to put money to work even in rocky markets, provided issuers are prepared to compensate them for unstable market conditions.

By 15:30 GMT, the iTraxx Crossover index was 26.5bp tighter at 693bp, but had traded as wide as 757.75bp as markets digested continous headlines on Greece and the ECB unexpectedly cut interest rates.

Yet Faurecia, at the higher end of the speculative-grade rating scale, drew enough demand to increase the size of the five-year bond by EUR50m to EUR350m with final guidance set to yield 9.5%, in line with initial guidance of 9.5% area.

That offers a new issue premium of around 200bp over similarly rated, and better-known, high-yield company Continental's 6.5% EUR625m bond maturing in January 2016.

The Faurecia deal is expected to price on Thursday via joint bookrunners BNP Paribas, Credit Agricole, Natixis and Societe Generale. HSBC and MUFJ are co-managers.

Elsewhere, attention is on a triple-C EUR287m eight-year subordinated high-yield bond backing the buyout of Swedish telecom firm Com Hem.

The deal -- the first triple-C bond to be launched since July -- will enable underwriters to shift more unsold leveraged buyout loans off their balance sheets.

Goldman Sachs is the global co-ordinator on the bond, while Bank of America Merrill Lynch, Deutsche Bank, Morgan Stanley, Nordea and UBS are bookrunners. Investor meetings, which began on Tuesday, are ongoing and official price talk may be announced on Friday after discussions with U.S. investors.

Early market coupon talk on the deal was 12%, a level which would start to impact the company's cash flow, two investors said.

However, a source close to the transaction said the bond was expected to price below par with a cash coupon of sub-11%. (Reporting by Natalie Harrison, IFR Markets)



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