Air Canada has priced a $719 million senior secured enhanced equipment trust certificate (EETC) transaction for 13 Boeing aircraft.
The $400 million AA notes priced at a 3.3% coupon, the $172 million A notes at 3.55% and the $147 million B notes at 3.7%, a source close to the transaction says.
The AA notes have a spread of 93bps over 10-year US Treasury bond yields, the A notes 118bps over 10-year treasuries and the B notes 156bps over five-year treasuries.
The coupons on Air Canada's 2017-1 transaction are around 10bps lower than those on Spirit Airlines' $420 million 2017-1 notes, the last EETC in the market, that priced on 13 November.
The transaction finances nine 737 Max 8s and four 787-9s due in 2018, the prospectus shows. The 737s are due from January through April, and the 787s from January through May.
The collateral pool has an aggregate appraised value of $1 billion.
Air Canada executives previously said that they were considering a EETC, as well as other financing options, for some of the airline's 2018 aircraft deliveries.
Fitch Ratings considers both the 737-8 and 787-9 strong collateral, calling the latter "one of the best pieces of aircraft collateral available today", in a report today.
The AA notes are rated AA and Aa3, the A notes A and Aa3, and the B notes BBB and Baa3 by Fitch and Moody's Investors Service, respectively.
Credit Suisse, Deutsche Bank and Citi are joint structuring agents and lead bookrunners of Air Canada's 2017-1 notes. Morgan Stanley, TD Securities, JP Morgan, Barclays and Bank of America Merrill Lynch are bookrunners.
Natixis is manager, depositary and liquidity provider, and Wilmington Trust is trustee.