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Sunday, 17 December 2017

Investors take a shine to Diarough's diamond-backed bonds

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Gem trader Diarough Group added more bling to its new diamond-backed bond deal after increasing its size by US$5m to US$155m.

The rare deal, called SHINY 2017-1, priced on Thursday at levels that were in line with initial expectations, according to pricing details viewed by IFR.

A US$83m four-year tranche cleared at a 5% yield and a US$72m of seven-year class at 6%. Both classes were rated Single A.

Esoteric ABS has been a hot commodity in the past few months as investors look for places to pick up extra yield in a market dominated by mostly safe-haven and Triple A rated bonds.

Coinstar, for example, sold US$840m of 5.8-year Triple B notes at a 5.25% yield in May - the first asset-backed securitization to turn coin-counting machines into a new source of corporate capital. nL8N1I45PE

The Diarough deal is backed by the company’s inventory of rough and polished diamonds. nL5N1KP7YN It supplies marquee jewelry chains Tiffany and Cartier, among others.

The company first tapped the securitization market for funding in 2000 with a US$100m accounts receivable trade that was upsized to US$150m, according to Kroll.

Its first diamond inventory ABS closed in 2007, a US$150m bond deal, which was expanded by US$25m in 2010.

Guggenheim Securities was the deal’s sole bookrunner.

 

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