American Airlines has priced a $750 million senior unsecured private placement with funds earmarked for its pension obligations.
The three-year notes carry an interest rate of 5%, the Fort Worth, Texas-based carrier says. Proceeds will be used to fund pension contributions.
American initially said on 16 May that it planned to issue $350 million in unsecured bonds, though lenders indicated the same day that an up to $700 million transaction split equally between three- and five-year notes was expected.
The unsecured debt is rated "BB-" by Fitch Ratings and "B1" by Moody's Investors Service. Fitch notes that proceeds will fund pension contributions in 2019 and 2020, adding that as a result it views the transaction as credit neutral.
American expects $1.07 billion in minimum pension contributions in 2019 and 2020, a first quarter financial filing shows. This includes $443 million this year and another $629 million next year.
JP Morgan is lead-left bookrunner on the transaction and joined by Deutsche Bank and Citi.
Source: Cirium Dashboard