mbia insurance to buy 1.5 billion of usairways aircraft debt


Aug 20, 2002
03/10 14:54
MBIA Insurance to Buy US Airways Aircraft Debt for $1.5 Billion
By Lynne Marek
Armonk, New York, March 10 (Bloomberg) -- MBIA Insurance Corp., the biggest bond insurer, will purchase US Airways Group Inc. aircraft debt for $1.5 billion and sell it to a third party, gaining voting rights over the debt securities in the process.
MBIA, the insurer for the US Airways debt, said in a statement that it received the right to buy the securities when US Airways filed for bankruptcy protection last year. The purchase date will be March 20. The certificates, issued by four US Airways trusts, have interest rates of 7.08 percent to 8.11 percent and mature in 2018 or later.
US Airways, the seventh-largest U.S. carrier, recently made past-due payments of $64.2 million on some of these certificates, which are backed by Airbus SAS aircraft. The certificates, which are known as enhanced equipment trust certificates or EETCs, are widely used in the industry to fund aircraft purchases.
MBIA will still insure the certificates. After having some of the debt reinsured, its exposure to the certificates is $536 million, said MBIA spokesman Michael Ballinger.
Ballinger declined to identify the third party that bought the certificates from MBIA or to comment on the price paid by that party. US Airways spokesman David Castelveter declined to comment.
Some of the certificates lost value after MBIA announced the purchase, falling to below par, or 100 cents on the dollar, from about 102.5 cents Friday, said Reno Bianchi, an analyst at Salomon Smith Barney.