UPDATE 2-Singapore Airlines Bond May Spur More Asian Aviation Debt Agreements

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HONG KONG, Jan. 14 (Reuters) – Singapore Airlines has raised $ 500 million in its first US dollar bond issue, which the company will use to buy new planes as the global aviation industry braces for a rebound in travel post-pandemic.

The transaction closed early Thursday and was priced at US Treasuries plus 260 basis points, according to a statement from the airline.

The size of the 5.5-year deal was finalized after bookkeepers received bids above $ 2.85 billion and the bond carries a 3% coupon rate, the statement said.

“The issuance further strengthens the company’s liquidity position and gives SIA the financial flexibility to capture medium and long-term growth beyond the Covid-19 pandemic,” he said.

According to a list of conditions seen by Reuters, 150 investors signed up to the deal, and 76% of them were based in Asia.

The majority 83% of investors were fund and asset managers, according to the document.

“The reality is that these companies need capital and it is expected that there will be more debt issuance from the airlines,” said a source, who had direct knowledge of the agreement with Singapore Airlines and spoke on condition of anonymity.

Airlines are increasingly optimistic. Travel will resume later this year as a number of countries roll out vaccination campaigns to fight COVID-19.

Singapore Airlines is Asia’s first major airline to tap into global debt markets in 2021, after a rush for deals in the second half of 2020.

There were 19 deals during that period worth $ 17.62 billion, the largest of which was a $ 6 billion issue from Delta Air Lines in September, according to data from Refinitiv. Global airlines are expected to refinance at least $ 14.9 billion in bonds maturing in 2021, according to Dealogic data, while $ 23.1 billion in syndicated loans will become due this year.

Singapore Airlines has raised S $ 13.3 billion ($ 10.04 billion) in new cash in the current fiscal year that ends in March, it said in the statement. ($ 1 = 1.3250 Singapore dollars) (Reporting by Scott Murdoch in Hong Kong; Editing by Kim Coghill & Shri Navaratnam)

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