American Airlines breaks EETC records

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By admin September 4, 2014 15:34

American Airlines breaks EETC records

American Airlines has priced a $956,884,000 enhanced equipment trust certificate (EETC) in two tranches, both A and B notes were investment grade-rated which helped draw in insurance company investors and European investors to the massively oversubscribed deal.

The notes are secured on a pool of aircraft comprised of: five Airbus A319-112 aircraft delivered new to American in 2013, seven Airbus A321-231 aircraft delivered new to American in 2014, and five Boeing 777-323ER aircraft delivered new to American from 2012 to 2014.

The $741, 460,000 Class A notes due October 1, 2026 have an initial LTV of 54.2% with a weighted average life of 8.4 years. The A notes are rated A by Fitch and S&P and priced at 3.70%. The $215,424,000 Class B notes due October 1, 2022, have an LTV of 69.7% and a weighted average life of 5.4 years. The B notes, which are rated BBB- by Fitch and S&P, priced at 4.375%. The pricing for the B notes is the lowest ever for an aviation EETC, helped by the unexpected investment grade rating. 3.70% is also 5 basis points tighter than the price United secured for its EETC. The B notes were ten times oversubscribed, while the equally tightly priced A notes were 3.5 times oversubscribed.

As previously mentioned, the orderbook was notable for the presence of insurance companies – many new investors in the space – and European investors that were present in the Emirates and Virgin Australia EETC deals. Another notable highlight of this deal is Milbank Tweed being instructed as underwriting counsel for American Airlines. This was a very hard fought deal for Milbank, which can now expect further deals from the new airline company.

Look for more in-depth analysis and expert comment on this deal in the forthcoming Airline Economics magazine Issue 22 Sep/Oct 2014. Subscribe today for online access and a print copy athttp://www.aviationnews-online.com/store/

admin
By admin September 4, 2014 15:34