Spirit Airlines has priced its $421 million senior secured enhanced equipment trust certificate (EETC) transaction in the 3% range, beating initial expectations by a quarter of a percentage point.
The $247 million 2017-1 AA notes priced at 3.375% coupon, the $82.4 million A notes at 3.65% and the $91 million B notes at 3.8%, a source close to the transaction says.
The coupon on the AAs is about 25bps tighter than initial expectations ahead of the launch today, they say.
Spirit achieved an interest rate on the 2017-1 senior debt that was only 2.5bps wider than that on American Airlines $545 million 2017-2 AA notes in July, the last such transaction in the market. This occurred despite the ultra low-cost carrier being smaller and a less well-known credit to investors.
The Miramar, Florida-based carrier has only tapped the EETC market once before, its $577 million 2015-1 notes for 15 Airbus A320 family aircraft in July 2015.
The 2017-1 notes finance 12 aircraft, including seven A320s due from December to October 2018 and five A321s due in February and March 2018. The pool has an aggregate appraised value of $573 million.
Fitch Ratings rates the 2017-1 AA notes AA, the A notes A, and the B notes BBB+.
Morgan Stanley and Citi are joint structuring agents and joint lead bookrunners of the 2017-1 transaction. Goldman Sachs and Barclays are joint bookrunners.
Commonwealth Bank of Australia is the liquidity facility provider and Citi is the depositary.