Published on 7/27/2021 in the Prospect News Canadian Bonds Daily and Prospect News High Yield Daily.
New Issue: Air Canada sells secured notes in $1.2 billion, C$2 billion tranches
By Paul A. Harris
Portland, Ore., July 27 – Air Canada priced two tranches of senior secured notes (Ba2/BB-/BB) on Tuesday, according to market sources.
An upsized $1.2 billion five-year bullet tranche priced at par to yield 3 7/8%, 12.5 basis points through the 4% to 4¼% yield talk and well inside of early guidance in the mid-to-high 4% area. The tranche size increased from $1 billion.
An upsized C$2 billion tranche of eight-year notes priced at par to yield 4 5/8%. The tranche size increased from C$1.5 billion. The yield printed on top of talk that had the Canadian dollar-denominated notes pricing 75 basis points behind the U.S. dollar-denominated notes.
Citigroup led the U.S. dollar-denominated tranche. JPMorgan, TD, Barclays, BofA, Credit Suisse, Deutsche Bank and Morgan Stanley were joint bookrunners for the tranche.
TD led the Canadian dollar-denominated tranche. Citigroup, JPMorgan, Barclays, BofA and Morgan Stanley were joint bookrunners for this tranche.
The Montreal-based international air carrier plans to use the proceeds to redeem, repurchase or discharge its C$200 million of first-lien senior secured notes due 2023 and C$840 million of second-lien senior secured notes due 2024, as well as to pay off $578 million outstanding under its existing U.S. term loan B due 2023 and $600 million outstanding under existing senior secured revolver due 2024, with the remainder to be used for working capital and general corporate purposes.
| Issuer: | Air Canada
|
| Securities: | Senior secured notes
|
| Trade date: | July 27
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| Settlement date: | Aug. 11
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| Ratings: | Moody's: Ba2
|
| S&P: BB-
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| Fitch: BB
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| Marketing: | Roadshow
|
|
|
| U.S. dollar notes
|
| Amount: | $1.2 billion, increased from $1 billion
|
| Maturity: | Aug. 15, 2026
|
| Lead bookrunner: | Citigroup
|
| Joint bookrunners: | JPMorgan, TD, Barclays, BofA, Credit Suisse, Deutsche Bank and Morgan Stanley
|
| Co-managers: | BMO, CIBC, HSBC, NBC, RBC and Scotia
|
| Coupon: | 3 7/8%
|
| Price: | Par
|
| Yield: | 3 7/8%
|
| Spread: | 318 bps
|
| Call protection: | Make-whole call at Treasuries plus 50 bps until Feb. 15, 2026, then callable at par; otherwise non-callable
|
| Distribution: | Rule 144A and Regulation S for life
|
| Price talk: | 4% to 4¼%
|
|
|
| Canadian dollar notes
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| Amount: | C$2 billion, increased from C$1.5 billion
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| Maturity: | Aug. 15, 2029
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| Lead bookrunner: | TD
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| Joint bookrunners: | Citigroup, JPMorgan, Barclays, BofA and Morgan Stanley
|
| Coupon: | 4 5/8%
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| Price: | Par
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| Yield: | 4 5/8%
|
| Spread: | 362 bps
|
| Call protection: | 4.5 years
|
| Distribution: | Rule 144A for non-Canadian investors, private placement for Canadian investors
|
| Price talk: | 75 bps behind U.S. dollar-denominated notes
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