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Published on 1/29/2004 in the Prospect News Bank Loan Daily, Prospect News Convertibles Daily, Prospect News Distressed Debt Daily and Prospect News High Yield Daily.

Moody's rates American Airlines notes

Moody's Investors Service said it has assigned American Airlines Inc.'s fixed-rate secured notes due 2009 a rating a Ba2 for the $180.5 million class A notes and a rating of B2 for the $53.5 million class B notes.

Moody's said the ratings of the notes reflect the rating of American (B3 senior implied, Caa2 senior unsecured) as the underlying obligor, and the spare parts provided as security for the transaction. Supporting the class A notes is the value of collateral provided to the transaction, a liquidity facility that provides for payment of up to four semiannual interest payments in the event of a default on the part of American.

The rating of the class B notes reflects their subordination and lack of control in the event of a default by American, the lack of a liquidity facility to defer default on the notes and the relatively high loan to value (70%).

The structure of the transaction is similar to that of a typical Enhanced Equipment Trust Certificate.


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