United Airlines sells pass-throughs; Sallie Mae prices crossovers; United Airlines rises

By Cristal Cody and Aleesia Forni

Virginia Beach, March 24 - The high-grade bond market was subdued to kick off the week on Monday.

United Airlines Inc. and SLM Corp. accounted for the only action in the primary market during the session.

United Airlines came to market with a $949,459,000 offering in two classes of series 2014-1 pass-through certificates on Monday.

There was $736,647,000 of 4% class A certificates maturing on April 11, 2026 priced at par and $212,812,000 of 4.75% class B certificates due April 11, 2022 sold at par.

The company plans to use proceeds to purchase 16 new Boeing aircraft and nine Embracer aircraft.

Also on Monday, Sallie Mae priced an $850 million offering of 6.125% 10-year crossover bonds at 99.082 to yield 6.25%.

The notes sold on top of yield talk and priced with a spread of Treasuries plus 352 basis points.

Following last week's roughly $17 billion of supply, sources had expected activity to pick back up on Monday.

"It was strangely quiet today," a market source said of the session's activity.

Investment-grade bonds were mostly flat to modestly weaker on Monday, according to market sources.

The Markit CDX North American Investment Grade series 22 index eased 1 bp to a spread of 72 bps.

United Airlines' 4% class A pass-through certificates edged up in aftermarket trading, a trader said.

SLM's new notes were active in trading as the session closed, according to a trader.

United sells pass-throughs

United Airlines priced $949,459,000 of series 2014-1 pass-through certificates from two classes, according to a filing with the Securities and Exchange Commission.

The deal included $736,647,000 of 4% class A certificates (/A-/A) and $212,812,000 of 4.75% class B certificates (/BB+/BB+), which both priced at par.

United Airlines' 4% class A pass-through certificates rose to 100.25 bid, 100.5 offered in aftermarket trading, a trader said.

Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC were the lead bookrunners.

The joint bookrunners were Deutsche Bank Securities Inc., Goldman Sachs & Co., Barclays, Credit Agricole Securities (USA) Inc. and Citigroup Global Markets Inc.

Proceeds will be used to purchase 16 new Boeing aircraft and nine Embracer aircraft scheduled for delivery from March 2014 to March 2015.

The airline is based in Chicago.

Sallie Mae new issue

SLM Corp. (Sallie Mae) priced $850 million of non-callable 6.125% 10-year senior notes (Ba1/BBB-/BB+) at 99.082 to yield 6.25% on Monday, according to a market source.

The yield printed on top of yield talk.

SLM's notes due 2024 headed out at 98.75 offered in the secondary market, a trader said.

Barclays, Credit Suisse Securities and J.P. Morgan Securities LLC managed the sale.

The provider of education loans is based in Newark, Del.

Bank/brokerage CDS mostly flat

Investment-grade bank and brokerage CDS prices were mostly unchanged, according to a market source.

Bank of America Corp.'s CDS costs were flat at 64 bps bid, 67 bps offered. Citigroup Inc.'s CDS costs ended unchanged at 76 bps bid, 79 bps offered. JPMorgan Chase & Co.'s CDS costs were flat at 57 bps bid, 60 bps offered. Wells Fargo & Co.'s CDS costs were unchanged at 39 bps bid, 42 bps offered.

Merrill Lynch's CDS costs closed flat at 72 bps bid, 77 bps offered. Morgan Stanley's CDS costs eased 2 bps to 89 bps bid, 92 bps offered. Goldman Sachs Group, Inc.'s CDS costs ended flat at 97 bps bid, 100 bps offered.

Paul Deckelman and Paul A. Harris contributed to this review.

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