Singapore airline launches US dollar debt debut

According to Hong Kong Reuter reports, on January 13th 2021, Singapore Airlines commenced its initial US dollar bond to assist in the purchase of a new aircraft. This information is based on “Term Sheet” seen by Reuters.

According to sources who have direct knowledge on this subject, it is said that confirmation is yet to be made official on the magnitude of the deal, but very probable of it being a “bench-mark” transaction which in reality means an amount in the range of US$300 million (S$ 396.8 million).  

It appears that the final amount will be calculated only once the orders have been placed by the investors. Source information cannot be divulged since the information is yet to be made public.

Due to the glut of debt issuances in the airline industry in the past six months, it has been witnessed that carriers are building up cash thresholds as a means of cushioning themselves against financial impacts caused by the Coronavirus pandemic and fervently hoping for travel to return to normal since more and more countries have launched the vaccination campaign.

According to data received from Refinity, it is alleged that 19 deals were signed during the time at a total value of US$ 17.62 billion of which, the largest was signed in September was from Delta Airlines at the cost reading US$6 billion.

Potential SIA investors have been told the initial price guidance for the 5.5 year deal is set at the US treasury yield plus 300 basis points.

As per the information received and since officials have not been authorized to comment to the media, it is known that SIA customarily have issued debt in local currency, but the most recent bond which cannot be bought by investors from the United States will assist the airline to diversify its sources of funding.

It is reported according to the “term sheet” that all funds raised would be for the purchase of the new aircraft and its related payments.

Airline sources said on Monday, that the passenger capacity was down by an alarming 81.3 percent with comparison to the same time last year.

They are expecting   their passenger turnout to be about 25% of its Covid levels by the end of March and would be able to passenger nearly 45% of the pre-crisis destinations.

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