Fitch assigns United’s bonds BB+

Fitch Ratings said it assigned BB+/RR1 ratings to United Airlines Inc.’s proposed secured bond issuance.

United Airlines plans to issue $2.25 billion in secured notes, which will be collateralized by a portfolio of 360 aircraft.

The proceeds will be used to refinance the company’s recently issued $2 billion 364-day revolving credit facility, with additional proceeds going to add cash to the balance sheet.

“The BB+/RR1 ratings are supported by United’s BB- corporate rating and Fitch’s recovery methodology, which assumes outstanding recovery for first-lien secured debtholders of issuers rated in the BB category. The two-notch uplift from the corporate rating is also supported by the allocation of an estimated going concern valuation in a hypothetical distressed scenario,” Fitch said in a press release.

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