Aviation

April 18, 2018
 

Delta prices three debt tranches

Investment-grade US major Delta Air Lines in mid-April priced three tranches of senior unsecured debt in a $1.6 billion public offering.

Delta priced $500 million of notes that carry a 3.800% coupon, are priced at 99.869%, and are scheduled to mature on 19 April 2023.

Delta priced $500 million of notes that carry a 4.375% coupon, are priced at 99.960%, and are scheduled to mature on 19 April 2028.

Delta priced $600 million of notes that carry a 3.400% coupon, are priced at 99.952%, and are scheduled to mature on 19 April 2021.

BNP Paribas Securities, Credit Suisse Securities (USA), Deutsche Bank Securities, Fifth Third Securities, Morgan Stanley, Wells Fargo Securities, Barclays Capital, BBVA Securities, Citigroup Global Markets, Goldman Sachs, ICBC Standard Bank, JP Morgan Securities, Merrill Lynch Pierce Fenner & Smith, PNC Capital Markets, SMBC Nikko Securities America, Standard Chartered Bank and US Bancorp Investments are acting as joint book-running managers for the offering.

Credit Agricole Securities (USA), Natixis Securities Americas, Siebert Cisneros Shank & Co and Williams Capital Group are acting as co-managers for the offering.

Delta intends to use proceeds to repay borrowings outstanding under the secured Pacific term loan B-1 facility and 2015 term loan facility, which had a combined outstanding balance of just over $1.5 billion at the end of calendar 2017, and for general corporate purposes.

This transaction will continue the trend of Delta‚Äôs moving its capital structure from secured financing toward unsecured, and it will free up collateral previously encumbered by the two term loans, including Delta’s Pacific route rights and certain accounts receivable, aircraft, spare engines, etc.

After paying down the term loans, Delta’s debt structure will move from roughly 70% secured debt closer to a fifty-fifty split between secured and unsecured.