Market Trends 2021/22: Competitive Bid Loan Provisions

Review the market trends in competitive bid loan provisions. This practice note discusses current market trends in publicly-filed credit agreements since the last quarter of 2021. The data analyzed in this practice note was obtained using Market Standards, which contains over 4,000 publicly-filed credit agreements from 2017 to the present.

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• Market Standards Highlights:
  • JetBlue Airways. On October 21, 2022, JetBlue Airways Corporation (“JetBlue”) and certain of its subsidiaries entered into a $600 million credit agreement (the “Credit Agreement”) with Citibank, N.A., as agent, and the lenders party thereto from time to time. The Credit Agreement modified JetBlue’s existing credit facility to increase the lending commitments by $50 million, for total commitments of $600 million, and establish the maturity date for the $600 million in lending commitments as October 21, 2024 (the “Amended Credit Facility”).
    
    Notable Provisions: (1) The Amended Credit Facility includes a variable interest rate based on SOFR, plus a margin of 2.00% per annum, or the alternate base rate (at JetBlue’s election) plus a margin of 1.00% per annum, in each case with a floor of 0%. The applicable margin may be adjusted by a sustainability adjustment depending on its ESG score. (2) The Credit Agreement does not include a SOFR spread adjustment. To track credit spread adjustments, see our Credit Spread Adjustment Tracker. (3) The obligations of JetBlue under the Amended Credit Facility are secured by liens on certain eligible aircraft spare parts, aircraft and spare engines, and flight training devices. JetBlue may also pledge cash and cash equivalents and slots, gates, and routes. For more information on perfection of security interests in aircraft-related collateral, see Perfection Outside Article 9: Vessels, Aircraft, Intellectual Property, and Life Insurance Policies and Security Interests in Uncommon Collateral Presentation.

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