American Airlines To Sell $2 Billion EETC
American Airlines is bringing a $2 billion enhanced equipment trust certificate transaction to market today, considered the largest EETC to date, according to BW sister publication Corporate Financing Week. Merrill Lynch and Morgan Stanley will be co-joint bookrunners. The issue will be sold under rule 144A to qualified institutional investors. The second largest EETC was issued by United Airlines and came in slightly over $1.5 billion in December 2000.
In terms of pricing, this is American's third EETC, making their paper relatively scarce on the Street in comparison with such paper as Continental Airlines' EETC, which consists of about 25% of the entire EETC market. Still, the all-in coupon will be low, said one official close to the deal. "It will price aggressively, similar to secondary levels" said a banker on the deal. The bid to offer spread for American's A1 tranche from its May EETC has a 164-160 spread, its A2 tranche has a 143-139 spread, its B tranche has 189-184, its C tranche 202-197 and its D tranche has a 265 bid. According to a trader working with the deal, the American issue should be priced similar to Delta Airlines's recent offering, which came at 145 for its A1 five-year amortized tranche, 148 for its 10-year bullet, 183 for its B tranche and 188 for its C tranche.