Singapore Airlines raises US$500m in oversubscribed US-dollar debt debut
The notes, due 2026, will be issued at 99.573% of their principal amount with an annual coupon of 3%
Singapore
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.
OCBC credit research analyst Ezien Hoo said taking the next leap in the US dollar bond market is a natural evolution for SIA in expanding its financing channels.
"Tapping this window is also smart given the still-low-rate-environment and optimism over re-opening plays, of which airlines are seen as a beneficiary," she said.
The latest bond issue falls 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.
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.
"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 (MCBs) 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."
Amid a highly challenging environment for airlines, Ms Hoo said the new lines of credit will allow SIA to replenish its cash buffer, reducing the probability it will need to exercise the option to issue the MCBs.
Shares of SIA closed flat on Thursday at S$4.35, after the news.
