Struggling US high yield bond market sees first triple-C issue since June

An investor call was scheduled for today at 11 a.m. ET in connection with a high-yield bond offering for Jones DesLauriers Insurance Management Inc., according to market sources. The roadshow for the $300 million of eight-year (non-call three) notes is currently expected to conclude on Dec. 8.

Initial price thoughts for the paper are tipped with a high 10%-11% yield, sources noted. Joint bookrunners are BofA Securities, BMO Capital Markets, CIBC and TD Securities.

Toronto-based insurance broker Jones DesLauriers provides business and personal insurance solutions and services. The company is a wholly owned subsidiary of Navacord Inc. — a Canadian commercial insurance brokerage and benefits provider — which is partially owned by Madison Dearborn. Net proceeds from the offering will be used to repay the company's second-lien credit facilities and for general corporate purposes, including future acquisitions.

Fitch on Dec. 5 assigned a CCC+ issue rating to the proposed bonds, with a 6 recovery rating. The agency has a B rating on parent Navacord, with a stable outlook. The tranche is expected to garner respective CCC/Caa2 grades at S&P Global Ratings and Moody’s. The deal will mark the first new-issue in the ratings segment since June, LCD data show.

Pro forma for the unsecured issuance, Fitch notes the capital structure will also comprise a C$100 million senior secured revolver and C$967 million of senior secured first-lien term loans. Reported gross leverage is 8.3x as of Aug. 1, 2022, while net leverage is more manageable, near 6.2x, pro forma the new bond print and M&A activity, the agency said.

The debt will be structured with a first call at par plus 50% of the coupon, as well as an equity clawback at up-to-40% at par, plus the coupon during the non-call period and a change of control at 101%.

This article originally appeared on PitchBook News