United tightens spreads on nearly $950m EETC

Washington DC
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United Airlines parent United Continental Holdings has priced its $949.4 million enhanced equipment trust certificate (EETC) issue, achieving spreads up to 30bp tighter than those on its previous capital markets deal.

The Chicago-based carrier achieved a 4% all-in rate on the $736.6 million A tranche and a 4.75% all-in rate on the $212.8 million B tranche on its 2014-1 notes, according to a stock exchange filing.

The A notes priced at 126bp over 10-year US Treasuries, based on the 24 March yield curve. This represents a 30bp improvement compared to the 156bp spread on the $720.3 million A tranche of United’s 2013-1 EETC in August 2013.

The B notes priced at 244bp over seven-year US Treasuries, based on the yield curve. This is a 19.5bp improvement compared to the 263.5bp spread on the $209 million 2013-1B tranche.

The 2014-1A notes have a 12-year tenor and the B notes an eight-year tenor.

The issue is secured by 25 aircraft, including 13 Boeing 737-900ER, two Boeing 787-8, one 787-9 and nine Embraer 175s. The aircraft will be delivered from this March to March 2015.

Fitch Ratings rates the A tranche A and the B tranche BB+.

Morgan Stanley and Credit Suisse are lead bookrunners, and Barclays, Citi, Credit Agricole, Deutsche Bank and Goldman Sachs are bookrunners.