American Airlines sells pass-through certificates; spreads move sideways; Huntington firms

By Cristal Cody and Aleesia Forni

Tupelo, Miss., July 31 - American Airlines Inc. came to market during Wednesday's session with an offering of pass-through certificates as most issuers stayed away from the primary.

However, one syndicate source noted that market activity "could pick back up tomorrow" following the Federal Open Market Committee's statement that the Federal Reserve plans to continue its quantitative easing program.

Details were released for the recent issue from Eskom Holdings SOC Ltd.

A source said the deal's book reached more than $4 billion.

Investment-grade secondary market activity quieted on Wednesday. Corporate bonds ended flat to slightly better after the Fed ended its two-day policy meeting.

"Given the reaction in the market after the previous FOMC meeting, most issuers decided not to line up for anything today," one source said. "In general, spreads are moving sideways."

The Markit CDX Series 20 North American Investment Grade index fell 1 basis point to a spread of 75 bps.

In the secondary market, Huntington Bancshares Inc.'s 2.6% senior notes due 2018 firmed to 122 bps bid, 117 bps offered, a trader said.

Huntington, a Columbus, Ohio-based financial holding company, sold $400 million of the notes (Baa1/BBB/BBB+) at a spread of 125 bps over Treasuries on Tuesday.

American Airlines' new issue

American Airlines tapped Wednesday's market for $1,408,113,000 of 4.95% class A pass-through certificates in a private placement, according to a filing with the Securities and Exchange Commission.

The trade was done under Rule 144A.

The agents were Deutsche Bank Securities Inc., Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and J.P. Morgan Securities LLC.

The company's pass-through trust holds equipment notes to be issued by American that are secured by 41 currently owned Boeing 737-823 aircraft, 14 Boeing 757-223 aircraft, one Boeing 767-323ER aircraft and 19 Boeing 777-223ER aircraft.

Proceeds will be used by American to reimburse itself for the repayment of existing financing for the aircraft. That financing includes an enhanced equipment trust transaction done by American in July 2009, secured notes financing from July 2009 and an enhanced equipment trust transaction from October 2011.

The commercial airline, which is a subsidiary of AMR Corp., is based in Fort Worth, Texas.

Eskom gives details

Eskom Holdings sold $1 billion of 6.75% notes (Baa3) due 2023 at 99.017 to yield 6.875% during Tuesday's session, according to a market source.

The order book was $4.3 billion.

Citigroup and Barclays were the bookrunners for the Rule 144A and Regulation S deal.

Eskom Holdings is an electricity provider based in Johannesburg.

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