British Airways is prepping $929 million of aircraft pass-through certificates. The transaction, British Airways’ Pass Through Trusts Series 2013-1, is the company’s first offering of enhanced equipment trust certificates (EETC), according to Fitch Ratings in a report.
Citigroup is the lead bookrunner and is joined by HSBC, Deutsche Bank, and Morgan Stanley.
The deal was assigned preliminary ratings by Fitch and Moody’s Investors Service. The $721.6 million senior tranche Class A certificates, with an expected maturity of June 2024, were rated 'A' by Fitch and ‘Baa1’ by Moody’s. The $207.0 million Class B certificates, with an expected maturity of June 2020, were rated 'BBB’ by Fitch and ‘Ba1’ by Moody’s.
The structure largely follows the U.S. EETC model (pass-through special purpose vehicle, debt tranching, liquidity facility, cross-provisions, etc.) with aircraft collateral and LTVs comparable to recent EETCs, according to Fitch.
The proceeds from the certificates will be used to pre-fund the purchase of 14 new aircraft (six 787-8s, six A320-200s, and two 777-300ERs) scheduled to be delivered between June 2013 and June 2014. Proceeds will initially be held in escrow by Landesbank Hessen-Thuuringen Girozentrale until the aircrafts are delivered.
The rent payments of the notes to the mortgagee will be in U.S. dollars, eliminating currency exchange rate risk for the holders of the certificates, noted Moody’s.