Singapore Airlines raises US$500m in oversubscribed US dollar debt debut

SINGAPORE Airlines (SIA) has raised US$500 million via its first US dollar-denominated bond issue. The notes, due 2026, will be issued at 99.573 per cent of their principal amount with an annual coupon of 3 per cent.

The national carrier said on Thursday that the issuance was oversubscribed with the final demand tallying at more than US$2.85 billion, anchored by high-quality institutional investors including real money asset managers.

The notes fall under SIA's S$10 billion multicurrency medium-term note programme. The airline expects to issue the notes on Jan 20, 2021, subject to customary closing conditions, it said in a bourse filing. The expected maturity date for the notes is July 20, 2026.

The issue price was set at US treasuries plus 260 basis points, according to a term sheet seen by Reuters. The deal will also not be offered to investors based in the US. 

Citigroup was the sole global coordinator for the issuance. The joint bookrunners were Citigroup, HSBC and BofA Securities, and the joint lead managers were Citigroup, HSBC's Singapore branch and Merrill Lynch (Singapore).

Net proceeds from the issue will be used for aircraft purchases, aircraft-related payments and general corporate or working capital purposes, including refinancing SIA's existing borrowings.

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"The issuance further strengthens the company's liquidity position and provides SIA with the financial flexibility to capture medium to long-term growth beyond the Covid-19 pandemic," SIA said in a press statement.

It added it will continue to explore other means to further strengthen its liquidity as necessary, as previously stated.

SIA has raised about S$13.3 billion in additional liquidity since the start of FY2020/2021. This includes S$8.8 billion from its rights issue, S$2 billion from secured financing, S$850 million via a recent convertible bond issue, another S$500 million via a private placement of new 10-year bonds, as well as more than S$500 million through new committed lines of credit and a short-term unsecured loan.

Including the new lines of credit, SIA said it will continue to have access to more than S$2.1 billion in committed credit lines. For the period up to July 2021, the company also retains the option to raise up to S$6.2 billion in additional mandatory convertible bonds that would provide further liquidity if necessary.

SIA 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 Covid-19 pandemic."

SIA is the first major airline in Asia to look to global debt markets in 2021 after a rush of deals in the second half of 2020. There were 19 deals in that time period worth US$17.62 billion, the largest being a US$6 billion issue from Delta Air Lines, according to Refinitiv data. 

Last week, US$22.7 billion worth of US-dollar debt was issued in Asia, the busiest week in a year, Refinitiv data showed. 

READ MORE: Asian corporates risk taking USD funding for granted