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(Bloomberg) – American Airlines Group Inc. is planning a return to the debt market as early as March to help repay U.S. government loans that have helped keep the company afloat during the pandemic.
Goldman Sachs Group Inc., which last year helped United Airlines Holdings Inc. use its loyalty program to support new debt, is probing potential investors for credit in a debt deal for Americans, people say close to the file. American, which backed a $ 7.5 billion US Treasury loan with its loyalty program, is considering doing the same with its new debt, said the people, who asked not to be named because the matter is private. The terms are still fluid and could change, they said.
Learn more about United’s air miles debt deal
American was among the first wave of carriers to tap billions of dollars in Cares Act-included loans of $ 2 trillion for economic relief from the pandemic. Goldman is in talks with investors for a $ 7 billion to $ 9 billion refinance in the coming months for the Fort Worth, Texas-based company, the people said. Discussions focused on the potential for a 6% to 7% return.
Representatives for American and Goldman Sachs declined to comment.
The airline, which has borrowed both as part of the government’s payroll support program and as part of a carrier bailout program, is still deciding which of its government debt will be repaid when the refinancing, some people said.
While central banks still groom the economy with low interest rates, demand for high yield debt has exploded and rotten listed companies have flocked to the bond and loan markets to borrow. Borrowing costs for speculative-grade issuers fell below 4% this week for the first time, according to data from the Bloomberg Barclays Index.
The American got another boost recently after his stock was swept aside in a rally among heavily shorted stocks targeted by an army of traders on Reddit’s Wall Street Bets forum – jumping up to 31% in a trading session last month. Amid the commercial frenzy, the airline announced plans to sell until $ 1.1 billion in shares.
American’s AAdvantage loyalty program is estimated to be worth $ 18 billion to $ 30 billion, American said in May, as it negotiated with the Treasury Department to use at least some of the assets as collateral for ready.
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