US Airways has priced the senior tranche of its $819.6 million enhanced equipment trust certificate (EETC) below the 4% coupon threshold, continuing the tightening of yields on investment grade aircraft backed debt.
The $620.1 million A tranche carries an all in 3.95% interest rate and the subordinate $199.5 million B tranche carries an all in 5.375% interest rate, according to a stock exchange filing on 10 April.
The coupon is well below the 4.625% interest rate on the $418.1 million A tranche and the 6.75% interest rate on the $128.1 million B tranche of Tempe, Arizona-based US Airways' 2012-2 EETC issue in November 2012. It also beats the current market low of 4% that was achieved by senior aircraft backed debt issued by American Airlines and United Airlines in recent deals.
The 2013-1 A tranche is rated A- by Fitch Ratings, Ba1 by Moody's and BBB by Standard & Poor's (S&P), and the B tranche BB+ Fitch, B1 Moody's and B+ S&P.
US Airways proposed merger with American is understood to have improved the airline's credit quality, say various financial industry sources.
The airlines announced their plan to merge on 14 February and American received bankruptcy court approval for the deal on 27 March.
US Airways did not comment on the 2013-1 EETC by press time.