United Airlines parent United Continental Holdings launched a $300 million senior unsecured issue today.
The debt is guaranteed by United and will be used for general corporate purposes that could include repaying debt, funding pension liabilities or for working capital requirements, according to a prospectus filed with the stock exchange. The notes are due 1 June 2018.
The Chicago-based airline says that it wants to establish a benchmark for interest rates on unsecured debt with the issue, and may use a portion of the proceeds to pay down higher coupon debt. It anticipates the unsecured notes to price within a day.
Repaying high interest rate non-aircraft debt remains a focus for United. At the end of March, long-term debt and capital leases were down 2.5% to $10.95 billion compared to three months earlier.
John Rainey, chief financial officer of United, said that the carrier has $1 billion in debt and capital lease payments due during the remaining nine months of the year, during a first quarter earnings call on 25 April.
The issue is B2 by Moody's. Fitch Ratings and Standard & Poor's both rate United Continental B stable.
Bank of America Merrill Lynch, Barclays Capital, JP Morgan, Deutsche Bank and Morgan Stanley are joint bookrunners and managers of the issue. Bank of New York Mellon is trustee.
Note: Updated with comments from United