Singapore Airlines (SQ, Singapore Changi) has raised USD500 million in its first US dollar-denominated bond issue, which “will be used for aircraft purchases” as well as other purposes including the refinancing of existing debt, it announced in a statement.
The issuance, which was was finalised on January 14, was oversubscribed, with the bookrunners receiving bids amounting to more than USD2.85 billion, the company claimed.
The five-and-a-half-year bonds are being issued at a price that is 99.573% of their principal amount, with a maturity date of July 20, 2026, and carry a 3% coupon rate.
“The issuance further strengthens the company’s liquidity position and provides SIA with the financial flexibility to capture medium- to long-term growth beyond the Covid-19 pandemic,” it said, adding that it would continue to explore other means to strengthen its liquidity further.
According to a trade term sheet seen by Reuters, 150 investors bought into the bond issue, 83% of which were fund and asset managers. Of the 150, 76% were based in Asia.
Singapore Airlines is the first major Asian carrier to tap into the global debt markets in 2021, following a spate of deals in mid-2020. Unnamed sources in the finance sector confided to Reuters that they expect to see more debt issuances like this to come from airlines, as airlines are becoming more optimistic that travel, in particular business travel, will resume later in 2021.
The Singaporean carrier said in its statement that it had so far raised SGD13.3 billion Singapore dollars (USD10 billion) in fresh liquidity during the 2020-2021 financial year, which ends in March.
This includes SGD8.8 billion (USD6.6 billion) from a rights issue in April 2020. It said in a filing in December it had already used up about SGD7.1 billion (USD5.3 billion), mostly on ongoing operating expenses, ticket refunds, and debt servicing.
The total so far raised also includes SGD2 billion (USD1.5 billion) from secured financing, SGD850 million (USD640 million) via a recent convertible bond issue, SGD500 million (USD377 million) via a private placement of new 10-year bonds, and more than SGD500 million through new committed lines of credit and a short-term unsecured loan.