SIA raises US$500 million in US dollar bond debut

Demand tops US$2.85b; uses of funds include aircraft purchases

Singapore Airlines' latest bond issue comes under the airline's $10 billion multi-currency, medium-term note programme and brings to $13.3 billion the additional liquidity that it has raised since the start of the 2020-2021 financial year. The money
Singapore Airlines' latest bond issue comes under the airline's $10 billion multi-currency, medium-term note programme and brings to $13.3 billion the additional liquidity that it has raised since the start of the 2020-2021 financial year. The money from this fund-raising exercise will be used for aircraft purchases, related payments and other purposes, including refinancing loans. PHOTO: KUA CHEE SIONG

Singapore Airlines (SIA) has received a bumper response to its latest fund-raising exercise.

It raised US$500 million (S$663 million), with demand for its first United States dollar bond issue exceeding US$2.85 billion.

The cash will be used for aircraft purchases, related payments and other purposes, including refinancing loans, the airline said yesterday.

It added that the fund-raising move "provides it with the financial flexibility to capture medium-to long-term growth beyond the Covid-19 pandemic".

The oversubscribed issue was anchored by leading institutional investors, it noted.

Chief executive Goh Choon Phong said: "We are confident that this will further strengthen SIA's competitive advantage in the industry, and bolster our ability to emerge stronger from the challenges posed by the pandemic."

The five-year bonds, which carry an annual coupon of 3 per cent, are due to mature on July 20, 2026.

They are expected to be issued next Wednesday at a price of 99.573 per cent of their principal amount.

The airline reiterated that it will keep exploring other means to strengthen its liquidity if needed.

Its latest bond issue comes under SIA's $10 billion multi-currency, medium-term note programme and brings to $13.3 billion the additional liquidity that the airline has raised since the start of the 2020-2021 financial year.

This includes $8.8 billion from a rights issue, $2 billion from secured financing, $850 million via a recent convertible bond issue, a further $500 million from a private placement of new 10-year bonds, and more than $500 million through new committed lines of credit and a short-term unsecured loan.

SIA will continue to have access to more than $2.1 billion in committed credit lines, it noted.

  • 19

  • Number of deals from airlines tapping global debt markets in the second half of last year.

    US$17.62b

    Total value of those deals.

    US$6b

    Largest of the deals in that time, which was made by Delta Air Lines last September.

It has also retained the option up to July to raise up to $6.2 billion in additional mandatory convertible bonds if necessary.

Airlines are hoping travel will resume later this year as countries roll out vaccination programmes.

SIA is the first major airline in Asia to tap global debt markets this year following a rush of deals in the second half of last year, Reuters reported.

There have been 19 deals in that time worth US$17.62 billion, with the largest being a US$6 billion issue from Delta Air Lines last September, Reuters added.

Global airlines are expected to refinance at least US$14.9 billion worth of bonds that are set to mature this year, while US$23.1 billion in syndicated loans will become due this year, said Reuters.

Citigroup was the sole global coordinator for SIA's US dollar bond issue. Citigroup, HSBC and BofA Securities were joint bookrunners.

SIA shares closed unchanged at $4.35 yesterday.

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A version of this article appeared in the print edition of The Straits Times on January 15, 2021, with the headline SIA raises US$500 million in US dollar bond debut. Subscribe