Airline Sees Strong Bid for ABS

Chile’s Latam Airlines received $2.7bn demand for a $450m securitization of airline ticket payment flows, according to people familiar with the transaction. The 2020 ABS backed by USD and CAD-denominated receivables from ticket and cargo sales in the US and Canada priced at par with a 6.00% coupon, tight to 6.25%-area guidance and earlier mid-6% talk. The bond traded up 0.50-1.40 points Monday afternoon, according to a trader. Comping the BB+/BBB minus credit was difficult, though leads were said to target pricing inside of Colombian Avianca’s unsecured 2020 bond, trading to yield 7.25% Monday. The Latam bond will have a 2-year interest-only period followed by five years of amortizations. Citi and Bank of America Merrill Lynch managed the deal, issued through the Guanay Finance Limited SPV and rated BB+/BBB minus. The deal follows a June $133m 2024 structured deal, guaranteed by the UK’s Export Credit Guarantee Department (ECGD), priced to yield 2.581%, or MS+100bp.