American Airlines, the world’s second-largest carrier, plans to sell debt as borrowing costs for high-yield, high-risk companies decline, according to Bloomberg on Thursday, as the Federal Reserve said the U.S. economy is gaining strength.
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The company, which is a subsidiary of AMR Corp. (NYSE: AMR), is offering $450 million of senior secured notes due in 2012. Proceeds from the sale will be used to refinance an existing $432 million secured bank term-loan facility, American Airlines said yesterday in a statement distributed by PR Newswire.
Speculative-grade bond yields declined five basis points relative to benchmark rates to 788 basis points yesterday, the lowest level in 14 months, according to Merrill Lynch & Co.’s U.S. High Yield Master II index. The Fed on Thursday gave the first indication since August 2008 that the economy is getting stronger, even as it recommitted to keep the benchmark interest-rate “exceptionally low” for an “extended period.”
Fed Chairman Ben S. Bernanke is working to revive lending and reduce the 9.7 percent unemployment rate while preventing a surge in inflation from the $1 trillion expansion of the Fed’s balance sheet.
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