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Latam Airlines sets price talk on downsized $1.25 billion two-part secured notes offering
By Paul A. Harris
Portland, Ore., Oct. 11 – Chile-based Latam Airlines Group SA downsized its two-part offering of senior secured notes (S&P: B-) to $1.25 billion from $1.5 billion, shifting $250 million of proceeds to its concurrent bank loan, according to market sources.
The revised bond deal features a downsized $500 million tranche of five-year notes with two years of call protection, decreased from $750 million, and a $750 million tranche of seven-year notes with three years of call protection.
Both tranches are talked with 13 3/8% coupons to yield 15%.
The five-year notes are expected to be offered at an original issue discount of 94.423. The seven-year notes are expected to be offered at an OID of 93.103.
The deal, related to the company's exit from Chapter 11 bankruptcy during the past summer, began a roadshow in mid-to-late September with initial talk that had the five-year notes coming to yield in the low 13% area, and the seven-year notes coming in the low-to-mid 13% area.
JPMorgan is leading the notes sale.
The credit’s emerging markets provenance notwithstanding, U.S. high-yield accounts are expected to participate in the deal because many of them participated in the Latam Airlines debtor-in-possession financing, sources say.
Because of that captive audience of DIP participants, the bond deal has been playing to as much as 40% of reverse inquiry across both tranches, a sellside source said.
The airline holding company, which is based in Santiago, plans to use the proceeds to repay the DIP loans and for general corporate purposes.
The financing also includes a $1 billion term loan B, upsized from $750 million with the shift of proceeds from the bonds.
Commitments were due late Tuesday morning.
Latam Airlines filed for Chapter 11 bankruptcy protection in May 2020.
The bankruptcy court approved its restructuring in June 2022.
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