S&P gives United Airlines notes BB+

S&P said it assigned its BB+ issue-level rating to United Airlines Inc.’s proposed $1 billion of secured notes due 2023 and $1.25 billion of secured notes due 2025 and placed the ratings on CreditWatch with negative implications.

“The notes, which are guaranteed by parent United Airlines Holdings Inc., are secured by a pool of 360 aircraft. The notes benefit from Section 1110 of the U.S. Bankruptcy Code, which provides special protections to aircraft creditors. Because of this, we apply our criteria for rating airline equipment trust certificates (these are not enhanced equipment trust certificates [EETCs] but the legal protections are the same),” said S&P in a press release.

At the same time, S&P affirmed the BB+ issue-level rating on the company’s secured debt, but revised the rounded recovery estimate to 90% from 95%.

Also, the agency affirmed its BB- issue-level rating on United’s unsecured debt and revised the rounded recovery estimate to 35% from 40%.

“The revisions to our recovery estimates reflect the greater amount of both secured and unsecured debt in United’s capital structure, which reduces the value available for the secured and unsecured debtholders in a hypothetical default,” S&P said.

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