US Airways notes issuance upsized, while ILFC FRN prices sub-200bps

Victoria
By Victoria May 22, 2013 13:32

US Airways notes issuance upsized, while ILFC FRN prices sub-200bps

As reported yesterday, US Airways Group completed a $500m senior notes offering. The news that came in after the newsletter went out however was that the airline notes priced to par at 6.125% yield. Demand was so high that there is talk of a $100 upsizing. The notes are rated CCC+/Caa2/B-, which is lower than United’s recent deal although the US Airways notes priced more tightly.

Joint bookrunners on this deal were: Goldman Sachs, Citigroup, Barclays, Morgan Stanley and Credit Suisse.

US Airways also allocated a senior secured refinancing yesterday, which consists of a $1 billion six-year B-1 term loan (L+325, 1% LIBOR floor including six months of 101 soft call protection) and a $600 million, 3.5-year B-2 term loan (L+250, 1% floor). Leverage Commentary Data (LCD) reports that the $1 billion B-1 term loan breaking for trading at 100.5/101, from issuance at 99.5. At 99.5, the loan yields about 4.42% to maturity. The yield narrows to 4.17% at the midpoint of the opening market.
The $600 million B-2 term loan also broke into a 100.5/101 market, from issuance at par. The 3.5-year tranche is priced at L+250, with a 1% floor, and also includes six months of 101 soft call protection.

At par, the short-dated tranche yields 3.55% to maturity. This is the tightest print on record for a loan issued by a B-/B3 rated borrower, according to LCD. At a price of 100.75, the yield narrows to 3.31%.

Also, both loans include a 25 bps step-down to the spread upon the closing of the airline’s planned merger with American Airlines, says LCD.

The term loan is rated B+/B2, with a 1 recovery rating from S&P.

Sources yesterday told Airline Economics that the high-yield tranche was selling well.
Joint bookrunners on the loan are Goldman Sachs, Citi, Barclays and Morgan Stanley.
Meanwhile, Substantial demand drove pricing for ILFC’s $500 million floating-rate notes launched yesterday to sub-200bps. The three-year floating-rate notes offering launched at L+195.

Active bookrunners on this deal are: Goldman Sachs, Deutsche Bank, and UBS and passive bookrunners Bank of America, Barclays, Citi, Credit Suisse, JP Morgan, Morgan Stanley, and RBC.

Proceeds from the SEC-registered deal will be used for general corporate purposes, including debt repayment and the purchase of aircraft. Investors are guided toward expected ratings of BBB-/Ba3/BB.

ILFC expects to close the offering on May 24, 2013, subject to the satisfaction of customary market and other closing conditions. The Notes will be unsecured and will not be guaranteed by ILFC’s parent, any of ILFC’s subsidiaries or any third party.

Meanwhile, today is the last day in the office for Marc S. Allinson as VP Financial Services at Rolls Royce. Marc is leaving to “down-shift to a 50/50 work/life balance” – Marc will remain on the board of ISTAT and will also be doing some board work in the leasing industry. So I am sure we will all continue to see him around. Best of luck Marc!

Victoria
By Victoria May 22, 2013 13:32
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