By Paul A. Harris
Portland, Ore., Nov. 17 – American Airlines, Inc. priced an upsized $1 billion issue of senior secured notes due May 15, 2029 (Ba2/BB/BB-) at par to yield 8½% on Friday, according to market sources.
The issue size increased from $750 million.
The yield came at the tight end of the 8½% to 8¾% yield talk.
A special provision in the indenture would increase the coupon by 200 basis points during periods in which the collateral coverage ratio is less than 1.6 times. (62.5% loan-to-value), tested twice a year.
Security is a first priority lien on certain SGR for scheduled services from U.S. airports (other than DCA and LGA) to certain airports in Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea and Switzerland, with a second priority lien on certain SGR for scheduled services from U.S. airports (other than DCA and LGA) to LHR and certain airports in the European Union that will be automatically released upon the satisfaction and discharge of all existing notes collateral.
There is a collateral appraisal delivery requirement of twice per year.
In addition to upsizing the notes, the company also increased its concurrent term loan to $1.1 billion from $750 million.
The Fort Worth-based airline plans to use the bond and loan proceeds, including the incremental proceeds resulting from the upsizing of both of the tranches of new debt, to fund a full redemption of the 11¾% secured notes due 2025 as opposed to the previously planned partial redemption.
| Issuer: | American Airlines, Inc.
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| Amount: | $1 billion, increased from $750 million
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| Issue: | Senior secured notes
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| Maturity: | May 15, 2029
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| Joint lead bookrunners: | Citigroup Global Markets Inc. (sole structuring agent), BofA Securities Inc. and Morgan Stanley & Co. LLC
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| Joint bookrunners: | Barclays, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, SMBC Nikko Securities America Inc., BNP Paribas Securities Corp., Credit Agricole CIB, MUFG, U.S. Bancorp Investments Inc. and Bank of Texas
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| Coupon: | 8½%
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| Price: | Par
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| Yield: | 8½%
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| Spread: | 405 bps
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| First call: | Nov. 15, 2025 at 104.25
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| Trade date: | Nov. 17
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| Settlement date: | Dec. 4
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| Ratings: | Moody’s: Ba2
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| S&P: BB
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| Fitch: BB-
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| Distribution: | Rule 144A and Regulation S for life
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