American Airlines mulls boosting junk bond deal to $2 billion

American Airlines Group Inc. is considering increasing the size of its junk bond offering to $2 billion, up from the $1.5 billion initially discussed, according to people familiar with the matter.

The airline has received just over $3 billion in orders for the secured bond offering, the people said, asking not to be named discussing a private transaction. Of that, about $2.5 billion was arranged before the deal began formally marketing on Monday, two of the people said.

The debt is expected to be sold on Wednesday. The airline is also marketing a $500 million term loan, with commitments due at noon in New York.

A representative for Citigroup Inc., which is leading both deals, declined to comment. A representative for American Airlines also declined to comment.

Proceeds from the bond and loan sales will refinance a $1 billion 364-day term loan the company raised from banks in March, and bolster liquidity. The debt is part of a larger financing package that also raised about $1 billion in a share sale and $1 billion in new convertible bonds, both of which were increased from planned offerings of $750 million each.

Early pricing discussions on the junk bond deal were in the 12% area. The loan’s pricing comes out to an all-in yield of about 11%, according to Bloomberg calculations.