Led by Citigroup, Credit Suisse, Deutsche Bank and Morgan
Stanley, the deal was split into two tranches, a USD736.647m
A-/A rated Class A 4.00% 12-year maturing in April 2026, and a
USD212.812m 4.75% BB+ rated seven-year maturing April 2022.
Bookrunners were able to shave about 25bp off the initial
price thoughts on both tranches to price at 4.00% for the A and
4.75% for the B tranche after attracting USD4.3bn of demand.
The A Class notes got USD2.7bn of that.
Bankers are hoping the UAL deal will be followed by another
USD7bn worth of EETCs this year from US and non-US carriers
The structure provides cost-effective forward funding for
aircraft. The planes bought with the proceeds are placed in a
special purpose vehicle as collateral for the notes, and are
ring-fenced in case of bankruptcy.
Investors are attracted to EETCs because of the relatively
predictable returns as well as the assets that can be
repossessed in case of insolvency or default.
The new UAL deal will be backed by the aircraft they plan to
buy with the proceeds in 2014. They include 13 Boeing B737-900ER
aircraft, two Boeing B787-8s, one Boeing B787-9 and nine Embraer
Comparables included UAL's Class A 4.30% 2025s trading at
3.92% and its Class B 5.375% 2021s, yielding 4.75%.
Using those comps the Class A tranche came flat to
secondaries once an extra 10bp for the difference in average
life between the two is added to the 3.92%.
The Class B tranche appeared to price about 20bp through its
comp - the 5.327% 2021s yielding 4.75% - after adding 23bp for
curve adjustment between the average life of the old and new
The average life on the Class A tranche is 8.8 years and 5.9
years on the Class B.
Like other EETCs, the deal has a liquidity facility - in
this case provided by CA-CIB - which covers up to three
semi-annual interest payments. That helps boost the rating of
UAL's Class A was the only countable investment-grade
Split rated SLM Corp (Ba1/BBB-/BB+) was the only other
issuer in an oddly quiet market, issuing US$850m of 6.25%
10-year notes maturing in March 2024.
Led by Barclays, Credit Suisse and JP Morgan, the deal was run
off investment-grade syndicate desks and priced at the wide end
of intitial price thoughts of low 6s to 6.25%, despite a
US$1.6bn order book.
At 6.25% the deal offered 351.6bp over Treasuries, which
compared with a G+310bp spread on its outstanding 5.5% 2023s,
which were trading under par at $98.25 to yield 5.76%.
United Airlines Inc (UAL) announced a USD949.459m SEC registered
2-part EETC pass through certificates, Series 2014-1.
Collateral: 13x 737-900ERs, 2x 787-8s, 1x 787-9 (May 2014
through March 2015 deliveries) & 9x ERJ-175LRs (March 2014
through March 2015 deliveries). The active bookrunners are
Citigroup, Credit Suisse, Deutsche Bank and Morgan Stanley, with
Barclays, Credit Agricole and Goldman Sachs as the passive
bookrunners. UOP: to prefund the purchase by United of 16 new
Boeing aircrafts and 9 new Embraer aircrafts. Settle: 4/7/2014.
Class A: USD736.647m, rated A-/A, exp maturity 4/11/2026, legal
final 10/11/2027, avg life 8.8yrs, initial/max LTV 55.1% - IPTs:
Class B: USD212.812m, rated BB+/BB+, exp maturity 4/11/2022,
legal final 10/11/2023. avg life 5.9yrs, initial/max LTV 71.0% -
IPTs: low 5% area
LAUNCH: USD949.459m 2-tranche total. Class A: USD736.647m at
4.0%, Class B: USD212.812m at 4.75%
PRICED: USD949.459m 2-tranche total
-CLASS A: USD736.647 4.00% (exp mat 4/11/2026). At 100, yld
-CLASS B: USD212.812m 4.75% (exp mat 4/11/2022). At 100, yld
BOOKS: USD2.7bn (Class A); USD1.7bn (Class B)
COMPS: Class A: UAL 4.3% 2025 @ 3.92%.
Class B: 5.375% 2021 @4.75%
NIC: Class A: flat (+10bp for curve adjustment)
Class B: negative 23bp (+23bp for curve adjustment)
SLM Corp (SLM), Ba1/BBB-/BB+, announced a USD benchmark SEC
registered 10-year (3/25/2024) senior unsecured note offering.
The active bookrunners are Barclays, Credit Suisse, and JP
Morgan. Co-managers are Bank of America, Royal Bank of Canada,
Royal Bank of Scotland, Goldman Sachs and Deutsche Bank. UOP:
GCP. Settle: T+3.
IPTs: low 6s to 6.25%
PRICE GUIDANCE: 6.25% area (+/ - 12.5bp)
LAUNCH: USD850m at 6.25%
PRICED: USD850m. Cpn 6.125%. Due 3/25/2024. Ip USD99.082. Yld
6.25%. T+351.6bp. Settlement date 3/27/2014. First pay
COMP: SLM 5.5% 2024 $98.25 G+310.
NIC: about 37bp (after adding 5bp for curve adjustment to G+310)
(Reporting by Danielle Robinson; Editing by Marc Carnegie)