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Bond Market News
American Airlines Is Planning a Return to The Bond Market
February 15, 2021
US carrier American Airlines is planning a return to the bond market with a new issuance as soon as March to repay loans taken from the US government to tide through the pandemic. According to people familiar with the matter, Goldman Sachs is sounding out investors for the proposed issuance, which is said to have a similar structure to its Us Treasury loans that are backed by its frequent flier program. Bloomberg added that the deal size could be in the $7-9bn range with a potential yield of 6-7%, although terms are still fluid and could change. This comes after American reported an $8.9bn annual loss late last month. Despite the dismal numbers, American’s shares were one of the beneficiaries from the short-squeeze in several stocks driven by an army of traders on Reddit’s Wall Street Bets forum. The shares witnessed a `17% rally over two days in late January, before retreating slightly to currently trade at $17.27. American tried to capitalize on the rally by announcing a potential share sale with $1.1bn the day after the two-day rally.
American’s loyalty program, AAdvantage has an estimated value of $18-30bn, as per the company in May when it was negotiating the loan with the US Treasury. American’s 3.75% bonds due 2025 are trading stable at 78.84, yielding 10.28% currently.
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