AirAsia tests market with Deutsche-led US$230 million private debt

[KUALA LUMPUR] Deutsche Bank is marketing a US$230 million private-credit deal for Malaysian Budget airline AirAsia Aviation Group, according to people familiar with the matter, testing investor demand for the carrier amid rising fuel prices.

The 18-month transaction takes the form of a revenue bond backed by ticket sales of several AirAsia routes, said the people, who asked not to be named discussing private matters. Deutsche Bank has underwritten and fully funded the deal, and is now approaching selected banks and funds for syndication, they said.

Deutsche Bank and AirAsia both declined to comment when contacted by Bloomberg.

Oil prices have surged since the start of March as the Iran war led to attacks on energy infrastructure across the Middle East and the closure of the vital Strait of Hormuz shipping lane. The sharp jump in jet fuel prices has prompted a number of airlines to cut back on services.

On the positive side, AirAsia’s near-term outlook remains supported by sustained travel demand and a slew of cost-cutting measures such as fleet maintenance optimisation and strategic network planning, according to a research note from Public Investment Bank cited by Malaysian news agency Bernama.

The structure of the latest AirAsia deal is similar to a two-tranche, US$443 million securitised bond the airline carried out in 2024, which was also backed by revenues from ticket sales.

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Private credit funds Ares Management and Indies Capital Partners provided a US$200 million tranche, while aircraft lessors supplied the other US$243 million portion. BLOOMBERG