Add to balance / Manage account | User: | Log out |
Prospect News home > News index > List of issuers U > Headlines for United Air Lines Inc. > News item |
United Airlines scraps $2.25 billion secured notes offering; investors balked at rate, collateral
By Paul A. Harris
Portland, Ore., May 8 – United Airlines, Inc. announced late Friday that it has decided not to proceed with its $2.25 billion two-part offering of secured notes (Ba2/BB-/BB+).
The J.P. Morgan Securities LLC-led deal was the first to face serious headwinds since an April 9 announcement by the Federal Reserve Bank that it had created a special purpose vehicle that can be used to buy corporate bonds rated as low as Ba3/BB- in the primary or secondary market, under certain circumstances, and the first deal to be postponed since that time, market sources say.
The special purpose vehicle was put in place to help companies with acute exposure to the economic fallout of the ongoing Covid-19 pandemic, causing their credit-worthiness to erode.
United came in the middle of the past week looking to price tranches of three-year notes and five-year notes at a blended rate in the low 9% area.
The deal had been expected to price Thursday but struggled as investors pushed for a higher amount of interest and a stronger collateral package, according to market sources.
Talk pushed out to a 10% to 10˝% range and then to 11%, sources said.
There appeared to be a possible deal at 12%, a trader said late Thursday.
The initial collateral package included 360 aircraft amounting to roughly 46% of United's mainline fleet, but representing some of the “older vintages” of the airline's portfolio of aircraft, according to a ratings report by Fitch Ratings.
As negotiations went on, that collateral package was enhanced to include gates and routes, sources said on Friday.
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.