Diamond Resorts talks $525 million six-year secured notes to yield in 9½% area

By Paul A. Harris

Portland, Ore., July 22 – Diamond Resorts International Inc. talked its $525 million offering of six-year senior secured notes (B3/B-) to yield in the 9½% area on Wednesday, according to market sources.

Official talk came on top of initial guidance.

The deal was expected to clear the market in a Wednesday drive-by trade but was pushed into the Thursday session, a trader said.

Despite riding a wave of reverse inquiry amounting to two-thirds deal size, the order book remained below deal size late Wednesday, the trader added, noting that there were sizable orders for the notes wide of the price talk.

Left lead bookrunner RBC Capital Markets LLC will bill and deliver. Barclays is a joint bookrunner. Apollo and Natixis Securities Americas LLC are co-managers.

The Rule 144A and Regulation S for life notes become callable after two years at par plus 50% of the coupon. They feature a 40% equity clawback and a 101% poison put.

The Las Vegas-based timeshare company plans to use the proceeds to repay a portion of its 7¾% first-lien secured notes and a portion of its term loan B, both due September 2023, and to fund cash to its balance sheet.

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