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HONG KONG (REUTERS) – Singapore Airlines released its first U.S. dollar bond on Wednesday (Jan. 13) to help finance the purchase of new aircraft, according to a term sheet seen by Reuters.
The size of the deal has yet to be officially established, but it is expected to be a ‘benchmark’ transaction, meaning it should raise at least US $ 300 million (S $ 396.8 million), according to a source with direct knowledge of the matter.
A final size will be calculated once investors have placed their orders, the person said. The source could not be identified because the information had not yet been made public.
There has been a flurry of airline debt issues in the last six months as airlines accumulate levels of cash to hedge against the financial impact of the coronavirus pandemic as they await a travel spike as more countries launch campaigns of vaccination.
There have been 19 deals in that time worth $ 17.62 billion, the largest of which was a $ 6 billion issue from Delta Air Lines in September, according to Refinitiv data.
Potential SIA investors have been informed that the initial price guidance for the 5.5-year deal is set at the US Treasury yield plus 300 basis points.
SIA has traditionally issued debt in its local currency, but the latest bond, which cannot be sold to investors in the United States, will help the airline diversify its sources of financing, according to people working on the deal who were not authorized to do so. talk to the media.
The term sheet said that the funds raised would be used for new aircraft purchases and ‘aircraft-related payments’.
The airline said Monday that its passenger capacity in December was down 81.3 percent compared to the same period last year.
It said it expected its passenger levels by the end of March to be roughly 25 percent of its pre-Covid levels and it would fly to nearly 45 percent of its pre-crisis destinations.
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