SIA raises US$500m in US dollar bond debut, with demand exceeding US$2.85b

Singapore Airlines is the first major airline in Asia to tap the global debt markets in 2021.
Singapore Airlines is the first major airline in Asia to tap the global debt markets in 2021.ST PHOTO: ALPHONSUS CHERN

SINGAPORE - Singapore Airlines has raised US$500 million (S$663 million) in its first US dollar-denominated bond issue, with final demand reaching more than US$2.85 billion, the company said on Thursday (Jan 14).

The oversubscribed issue was anchored by high quality institutional investors including real money asset managers, said SIA.

Thanking investors for their "strong support”, chief executive officer 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 Covid-19 pandemic.”

The five-year bonds, which carry an annual coupon of 3 per cent per annum, are due to mature on July 20, 2026. They are expected to be issued on Jan 20, at an issue price of 99.573 per cent of their principal amount.

Proceeds from the bond issue will be used for aircraft purchases, related payments and other general purposes including refinancing of existing borrowings.

SIA said the issuance “provides it with the financial flexibility to capture medium-to-long term growth beyond the Covid-19 pandemic”.

It reiterated that the company will continue to explore other means to further strengthen its liquidity as necessary.

The US bond issue brings to $13.3 billion in additional liquidity that SIA 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, another $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.

Including the new lines of credit, SIA will continue to have access to more than $2.1 billion in committed credit lines, the flagship carrier added. It has also retained the option, up to July 2021, to raise up to $6.2 billion in additional mandatory convertible bonds for more liquidity if necessary.

Airlines are hoping travel will resume later this year as countries roll out their Covid-19 vaccination programmes.

SIA is the first major airline in Asia to tap the global debt markets in 2021, following a rush of deals in the second half of 2020, Reuters reported.

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

Global airlines are also expected to refinance at least US$14.9 billion worth of bonds set to mature in 2021, 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 the joint bookrunners.

SIA shares closed unchanged at $4.35 on Thursday, while the Straits Times Index gained 0.76 per cent.