Delta Air Lines talks $1 billion minimum five-year notes at 6¾%-7%; pricing Monday

By Paul A. Harris

Portland, Ore., April 27 – Delta Air Lines, Inc. talked a $1 billion minimum split-rated offering of five-year senior secured first-lien bullet notes (Baa3/BB) to yield 6¾% to 7%, according to market sources.

The deal is expected to price on Monday.

Official talk comes tight to initial guidance in the 7% area.

J.P. Morgan Securities LLC is the leading the Rule 144A and Regulation S notes offering.

The bonds were announced last week in an offer sized at $1.5 billion.

The Atlanta-based air carrier is also in the debt capital markets with a $1.5 billion term loan.

However, the ultimate tranche sizes, bonds and loan, remain to be determined, sources say.

Books for the term loan, its size to be-determined, were set to close midday Monday, New York time. Spread talk on the loan tightened, with the spread to Libor decreasing to 475 basis points from 500 bps, sources said.

Both the bond and loan tranches are secured by the airline's domestic slots at John F. Kennedy International Airport, LaGuardia Airport and Ronald Reagan Washington National Airport, as well as its London routes, its European routes and its Latin American routes.

Proceeds from both tranches will be used for general corporate purposes.

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