MMI relies on US investors for $300m high-yield bond

It attracted a $1.3 billion order book from more than 80 accounts, FinanceAsia reported, and bankers hailed the deal as a sign that the high-yield market has bounced back. Credit Suisse, J.P. Morgan and UBS were joint bookrunners.

It is the first-time a high-yield bond in Asia has been used to take out a buyout loan. The transaction will facilitate the pay down of $222 million outstanding on the existing financing package as well as $75 million of a bridge loan MMI used to acquire IntriPlex Technologies. KKR, which bought the company in 2007, initially wanted to take it public in 2011 through a $1 billion offering but this was abandoned due to poor market conditions.

Singapore-based MMI is 73%-owned by KKR, with company management holding the remaining 27%. It produces components for hard disk drives and counts Seagate among its major customers. Largely because of their knowledge of Seagate, US accounts took 79% of the allocation, with 13% and 8% going to Asian and European investors, respectively.

The US angle is significant in terms of Asian private equity. Unitas Capital is the only firm to have used a high-yield bond in a buyout transaction in the region, securing $375 million in support of its acquisition of Hyva last year. This was possible because creditors in the US were convinced by the company's solid manufacturing business model, European roots (although the majority of revenue comes from Asia) and US dollar revenue streams.

Reduced capacity in the bank financing market in recent months and lower leverage multiples that have been in place since the global financial crisis, has put the squeeze on private equity firms. In the absence of mature mezzanine solutions, other forms of financing are being considered. If the MMI issue signals a revival in the wider high-yield bond market, it will come as a relief to many.

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• Topics
• Financing
• Southeast Asia
• North America
• Buyouts
• Singapore
• USA
• Leveraged finance
• KKR
• buyout