American Air dangles 12% bond yield in $3.5b cash hunt

American Airlines Group is tapping all corners of the capital markets to raise at least $3.5b of cash in the latest test of investor willingness to finance travel companies still under strain from the coronavirus pandemic. The company is marketing a $1.5b secured junk bond maturing in 2025 with early pricing discussions for a yield of about 12%, according to people with knowledge of the matter. The company was sounding out some investors last week for a similar structure at a yield of 11%. As the most debt-laden of the largest US airlines, American is having to pay up. The yield on the bond is more akin to that of riskier CCC debt currently trading around 11.65%, even though the offering is expected to have at least two ratings in the double B ratings tier, the highest in the junk market. American is also marketing a $500m four-year loan at a spread of 9.5 percentage points over the London interbank offered rate and at a discounted price between 95 cents to 96 cents on the dollar, said the people, who asked not to be named discussing a private transaction. That comes to an all-in yield around 11%, based on Bloomberg calculations. The debt will be secured by slots, gates and routes across the world in the United States, Latin America, Asia, and Europe. Story has more financial details.<br/>