United Continental Holdings-subsidiary Continental Airlines has launched $425 million in secured pass-through certificates to partially finance 42 aircraft.
The 2012-3 class C enhanced equipment trust certificates (EETCs) are subordinate to the Chicago-based airline's $892.2 million 2012-1 and $843.9 million 2012-2 issues. They have an initial loan-to-value ratio of 82% and a 29 April 2018 bullet maturity.
Continental could achieve a coupon of between 4% and 6% on the notes, based on recent EETC deals. However, it is likely to a pay a premium due to the issue being subordinate to its other debt transactions this year.
US Airways achieved interest rates of 4.625% and 6.75% on its $546.2 million two-tranche 2012-2 EETC issue earlier this month, and Continental achieved coupons of 4% and 5.5% on the two-tranches of its 2012-2 issue in September.
Backing the 2012-3C issue are 35 Boeing 737-900ERs and seven Boeing 787-8s, of which 21 were financed under the 2012-1 EETCs and 21 under the 2012-2 EETCs. Continental has taken delivery of 23 of the aircraft with 19 to be delivered through July 2013. Previously Delivered 2012-3C Aircraft
United Continental Future Deliveries 2012-3C Aircraft
The 42 aircraft are appraised at $2.67 billion by AISI, BK Associates and Morten Beyer & Agnew, according to Continental.
Fitch Ratings rates the 2012-3C issue BB-, Moody's B1 and Standard & Poor's (S&P) B+. S&P notes that the certificates are cross-collateralised so that Continental would repay the amount owed to buyers following the sale of the assets if it rejected the 2012-1 or 2012-2 notes on any of the 42 aircraft, in a report today.
Continental initially launched a $200 million 2012-1 class C EETC deal today but replaced it with 2012-3C issue due to strong investor interest. The smaller deal would have only partially financed 21 aircraft from the 2012-1 deal in April.
Credit Suisse, Goldman Sachs and Morgan Stanley are lead bookrunners on the 2012-3C issue. Citi and Deutsche Bank are bookrunners, and Barclays Capital, Bank of America Merrill Lynch and JP Morgan co-managers.
Wilmington Trust is trustee, Natixis depositary and US Bank escrow agent.