UPDATE, 4:30 P.M. American Airlines Group said Thursday it priced $500 million in unsecured senior debt at 4.625 percent. Net proceeds are expected to be $493 million after discounts and estimated offering expenses.
ORIGINAL ITEM: American Airlines Group announced Thursday it plans a private offering of $500 million in unsecured senior notes due 2020, to be used for “general corporate purposes.”
The company has been taking advantage of low interest rates to replace higher-cost debt on its balance sheet. The latest offering comes as rating agencies are seeing improved finances at the company.
On Tuesday, Moody’s Investors Service changed its rating outlook from “stable” to “positive,” and upgraded its ratings on four of American’s “Enhanced Equipment Trust Certificates.” It affirmed American’s other ratings.
Standard and Poor’s Ratings Services, which last upgraded AAG’s credit rating in late 2013, on Thursday said it “could raise ratings further if funds from operations to debt exceeds 25% and free operating cash flow to debt exceeds 10% on a consistent basis.”
Fitch Ratings on Thursday said it “views American’s credit profile as improving, and a Positive Outlook or rating action is possible in the near- to intermediate term if the merger integration continues smoothly and if fuel prices remain low.”
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