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Clock Ticking On Delta Exchange Offer

Delta Air Lines' bondholders have until the middle of next month to take advantage of the near-bankrupt company's exchange offer, through which unsecured noteholders can swap their positions--at a significant discount--for new, secured bonds.

Delta Air Lines’ bondholders have until the middle of next month to take advantage of the near-bankrupt company’s exchange offer, through which unsecured noteholders can swap their positions--at a significant discount--for new, secured bonds.


Roger King, analyst at CreditSights, anticipates Delta will file for bankruptcy within the next month. “If Delta goes into bankruptcy, its paper will be rendered worthless, so the exchange offer allows investors to pick up security, something that’s not worthless,” he explained.


That being said, there is a limited amount of paper to go around. Delta’s offer is for $680 million of new secured bonds, or the equivalent of $1.55 billion of unsecured bonds, and with 2.6 billion of unsecured notes outstanding tardy investors may get short shrift.


Delta’s offer, announced earlier this month, applies to three classes: the 8%s of ’08, the 10%s of ’11 and the 12%s of ’14.


 

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