United’s grounded 777s had troubled history in debt markets

Before coming under scrutiny because of a mid-air engine explosion, United’s aging fleet of Boeing 777s had already garnered plenty of criticism in credit markets. The aircraft that showered debris over a Denver suburb this past weekend was among assets that investors had been reluctant to accept as collateral last year when the airline sought to borrow billions of dollars to ride out the pandemic, according to flight records and debt documents reviewed by Bloomberg. United’s first attempt to sell debt backed by some of its oldest planes -- including the 26-year-old 777-200 with the engine mishap, and dozens more like it -- collapsed in May after investors demanded interest as high as 11% to compensate for the risk. A second effort to pledge the same aircraft for a new debt sale a few months later, along with engines and other spare parts that United had scraped together, was more successful. CreditSights analyst Roger King described the deal at the time, however, as a “kitchen sink” offering because of the poor quality of the underlying assets.<br/>