Delta Air Lines has priced a $1.6 billion senior unsecured bond that will refinance $1.54 billion in outstanding debt.

The $600 million three-year notes are priced at a 3.4% coupon, the $500 million five-year notes at a 3.8% coupon, and the $500 million 10-year notes at a 4.38% coupon, a securities filing shows.

The three-year notes are priced at a spread of 90 basis points (bps) to benchmark treasuries, the five-years at 115bps to benchmark, and the 10-years at 155bps to benchmark on 16 April, the filing shows.

Delta will use proceeds from the transaction to refinance the $1.05 billion outstanding under Delta's Pacific term loan B-1 due in October, $489 million outstanding under its 2015 term loan facility due in August 2022, as well as for general corporate purposes, the prospectus shows. The Pacific loan has an interest rate of 4.32% and the 2015 term loan a rate of 4.38%.

The Atlanta-based carrier plans to refinance secured debt with unsecured bonds to increase its pool of unencumbered assets and reduce interest expenses, chief financial officer Paul Jacobson said on 12 April.

The Pacific term loan is secured by Delta's route authorities, slots and gate leaseholds in the Pacific region, and the 2015 term loan by aircraft, spare parts, non-Pacific international routes, domestic slots and property.

Fitch Ratings and Moody's Investors Service rate the issue BBB- and Baa3, respectively.

BNP Paribas, Credit Suisse, Deutsche Bank, Fifth Third Securities, Morgan Stanley, Wells Fargo, Barclays Capital, BBVA, Citi, Goldman Sachs, ICBC Standard Bank, JP Morgan, Bank of America Merrill Lynch, PNC Capital Markets, SMBC Nikko, Standard Chartered and US Bancorp are joint bookrunning managers.

Credit Agricole, Natixis, Siebert Cisneros Shank and The Williams Capital Group are co-managers.

Source: Cirium Dashboard