Singapore Airlines (SIA) has raised $500 million in its first US dollar bond issue.
According to Reuters, there were 150 investors who bought into the deal and 76% of those were based in Asia. 83% investors were fund and asset managers. SIA said that the offer was oversubscribed.
The money will be used on aircraft purchases, aircraft-related payments and for general corporate or operating capital purposes, including the refinancing of SIA's current debt.
SIA said it has raised about S$13.3 billion ($10.04bn) in additional liquidity since the start of the 2020/2021 financial year.
Due to the Covid-19 pandemic, in July 2020, SIA reported a record S$1.12bn ($844.2m) net loss in the first quarter. In November, its net loss was S$2.34bn ($1.76bn) net loss for the July-September quarter. An SIA statement said that the loss included an impairment charge of S$1.3bn ($979.6m) related to the withdrawal of 26 older aircraft.
Mark Tan of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said: ”While recent $500 million debt raise by SIA is the first debt raise by a major airline in 2021, this appears to be a continuation of the various debt raisings from airlines from the latter half of 2020. This highlights the reality that airlines are likely to continue to need to tap into the debt markets for capital, even as they look forward to a potential resumption of air travel as the vaccination programmes get rolled out globally. “
“However, the fact that the SIA debt raise was several times oversubscribed by institutional investors does appear to suggest that the debt markets do continue to be receptive to funding major airlines during this interim period, as they wait out the pandemic,” he said.
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