Hawaiian Airlines talks $800 million five-year customer loyalty backed notes at 6% area yield

By Paul A. Harris

Portland, Ore., Jan. 27 – Hawaiian Airlines talked its $800 million offering of five-year first-lien senior secured notes (Ba3//B+) to yield in the 6% area on Wednesday, according to market sources.

Books close at 10:30 a.m. ET on Thursday.

The Rule 144A and Regulation S for life deal was heard to be three-times oversubscribed around noon ET on Wednesday, a trader said.

Barclays, Goldman Sachs & Co. LLC, BNP Paribas Securities Corp., Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC are the joint bookrunners.

The notes become callable after three years at par plus 50% of the coupon.

Issuing via HawaiianMiles Loyalty, Ltd. and Hawaiian Brand, the deal is backed by security including first priority interest in the cash revenue from the HawaiianMiles loyalty program and intellectual property related to HawaiianMiles, as well as Hawaiian’s brand intellectual property.

Bond investors will be protected by an annual appraisal of collateral backing the bonds, to be conducted each April.

A special interest rate trigger provision would increase the rate on notes by 2% if the loan-to-value ratio exceeds 62.5%, and continue to pay the higher rate until the ratio does not exceed that threshold.

Proceeds will be used to refinance the existing Coronavirus Aid, Relief and Economic Security (CARES) Act Economic Relief Program loan and further enhance the airline's liquidity position.

The Honolulu-based commercial airline joins United Airlines, American Airlines and Delta Air Lines, each of which brought bond deals backed by collateral related to their respective customer loyalty programs in 2020.

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