Spirit Airlines has priced $576.5 million of aircraft enhanced equipment trust certificates (EETCs), according to deal documents.
A $455 million tranche of class A certificates, rated single-A by Standard & Poor’s and Fitch Ratings, priced to yield 4.1%. A $120.9 million tranche of class B notes, rated BBB-’/BBB+’ priced to yield 4.4%. The class A notes have an expected maturity of April 2028 and the class B notes are due April 2024.
Citigroup, Morgan Stanley and Credit Suisse are the lead underwriters.
EETCs are backed both by aircraft and by the credit of the owner of the aircraft. The “trust certificate” is sold to investors in order to finance the purchase of an aircraft by a trust managed on the investor’s behalf. The trust then leases the aircraft to the airline, and the trustee routes payments through the trust to investors. Upon the maturity of the note, the airline receives the title to the aircraft.
Spirit, a low-cost carrier based in Miramar, Florida, plans to use the proceeds from the deal to finance the purchase of 12 Airbus A321-200 aircraft and three Airbus A320-200 aircraft to be delivered from October 2015 through December 2016.