American Airlines expected to price $1.5 billion five-year secured bullet notes on Wednesday

By Paul A. Harris

Portland, Ore., June 22 – American Airlines, Inc. plans to price $1.5 billion of five-year senior secured bullet notes (expected ratings Ba3/B+/BB-) on Wednesday, according to market sources.

Initial guidance has the deal coming to yield in the 12% area, a bond trader said.

The deal was set to be shopped on a Monday morning investor conference call.

Citigroup Global Markets Inc. is the left bookrunner. Goldman Sachs & Co. LLC, BofA Securities Inc. and J.P. Morgan Securities LLC are the joint bookrunners.

The Rule 144A and Regulation S for life notes feature a make-whole call but are otherwise non-callable.

In the event that a minimum collateral coverage ratio of 1.6-times is not maintained, a special interest penalty of 2% applies until the ratio comes back into compliance.

The Fort Worth-based air carrier plans to use the proceeds, along with proceeds from a concurrent $500 million term loan, for general corporate purposes, including increasing liquidity and repaying its 364-day delayed-draw term loan.

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