As airlines bleed cash, United abandons bond deal

Bond investors are getting excited again about coronavirus-plagued companies—if the price is right, anyway. United walked away from a $2.25b bond deal arranged by its bankers at JPMorgan Chase & Co. late Friday. The company gave no details in a regulatory filing, saying only that it “had decided not to proceed with” the proposed offering. The problem wasn’t demand, according to people familiar with the situation. Investors ordered more United bonds than were offered. But United didn’t want to commit to other terms investors wanted, including a higher interest rate and more protections for investors in case United defaults, according to these people. When the coronavirus pandemic first brought the global economy and travel to a halt, investors initially avoided debt from companies they thought were going to struggle as Americans traveled and spent less. But after the Federal Reserve’s move to buy corporate debt, the market has reopened even to hard-hit companies. Airlines, in particular, are showing more comfort with their cash positions, even though the industry is burning cash and flights are down as much as 90%. Airplane companies alone sold a combined $32b of debt in late April, including record-setting bond deals from Boeing and Delta have also received billions of dollars in aid from the federal government. By walking away from the table, United is showing it believes it has better options, said Duane Pfennigwerth, an analyst at Evercore ISI.<br/>