American Airlines muni bonds boosted by merger news

Dino D'Amore
By Dino D'Amore November 14, 2013 18:29

American Airlines muni bonds boosted by merger news

The price of municipal bonds issued by American Airlines has rallied as much as 60% on the news of the impending merger with US Airways, providing a windfall for municipal bond fund managers.

American Airlines muni bonds once traded for less than 20 cents on the dollar when the carrier entered bankruptcy protection but have now soared. Bonds issued on behalf of the airline in 1993, rose to $1.15 after a low of 16 cents, following the news the two airlines had settled the antitrust case with the US Department of Justice.

Nuveen High-Yield Municipal Bond Fund has been a particular beneficiary since the fund bought up close to $1.5bn unsecured American muni bonds from May 2012 at a significant discount. The bonds are reported to be trading up by 60%. Oppenheimer Rochester Fund Municipals owns American muni bonds secured by the terminal at John F. Kennedy International Airport.

Dino D'Amore
By Dino D'Amore November 14, 2013 18:29
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