United Airlines has priced its $1.01 billion enhanced equipment trust certificate (EETC) transaction, opening the secured aircraft debt market for 2019.
The Chicago-based carrier priced $717 million 2019-1 class AA notes with a 4.15% coupon, and $296 million class A notes with a 4.55% coupon on 28 January, a source tells FlightGlobal. Both the AA and A tranches mature in August 2031.
The AA notes came in with a spread of 140 basis points (bps) over 10-year US Treasury yields, and the A notes were 180bps over.
The pricing is wider than United's last EETC transaction, its 2018-1 transaction a year ago, when the AA tranche came in with a spread of 78bps over 10-year treasuries and the A tranche 98bps over.
The 2019-1 transaction is secured by and finances 25 new aircraft for United's mainline and regional fleets. The pool includes nine Boeing 737 Max 9s, six Boeing 787-10s and 10 Embraer 175s, the latter to be operated by ExpressJet Airlines for United, due from November 2018 through this July.
"The importance of the aircraft, particularly the Max 9s and the 787-10s, to United's network support the ratings assignment," says Moody's Investors Service in a report today. It rates the AA notes "Aa3" and the A notes "A2".
In addition, the 318-seat 787-10 complements the carrier's widebody fleet of 267-seat Boeing 777-200s and 366-seat 777-300ERs, the rating agency says.
United will deploy 787-10s on high-density transatlantic routes from Newark, including to Frankfurt, Paris Charles de Gaulle and Tel Aviv, beginning in March.
Citi and Credit Suisse are joint structuring agents and joint lead active bookrunners, with Goldman Sachs joining as a lead active bookrunner of the 2019-1 transaction. Deutsche Bank, Morgan Stanley, JP Morgan, Barclays, Bank of America Merrill Lynch, BBVA, BNP Paribas, Credit Agricole, Standard Chartered and Wells Fargo are bookrunners.
SMBC is the depositary and National Australia Bank the liquidity facility provider.
Source: Cirium Dashboard