Singapore Airlines launched its first US dollar bond on Wednesday to help fund the purchase of new aircraft, according to a term sheet seen by Reuters.
The size of the deal has yet to be officially set but is expected to be a ‘benchmark’ transaction which means it should raise at least $300 million, according to a source with direct knowledge of the matter.
A final size will be calculated once investors have placed their orders, the person said. The source could not be named as the information had not yet been made public.
There has been a rush of debt issuances from airlines in the past six months as the carriers build up cash levels to cushion themselves against the financial impact of the coronavirus pandemic while hoping for a travel rebound as more countries launch vaccination campaigns.
There have been 19 deals in that time worth $17.62 billion, the largest of which was a $6 billion issue from Delta Air Lines in September, according to Refinitiv data.
Potential Singapore Airlines 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.
It is the first US dollar bond issued by Singapore Airlines.
Singapore Airlines has traditionally issued debt in its local currency but the latest bond, which cannot be sold to investors in the United States, will help the airline diversify its funding sources, according to people working on the deal who were not authorised to speak to media.
The term sheet said the funds raised would be used for new aircraft purchases and ‘aircraft related payments’.
The airline said on Monday its December passenger capacity was down 81.3% compared to the same time last year.
It said it expected its passenger levels by the end of March to be about 25% of its pre-COVID levels and it would fly to nearly 45% per cent of its pre-crisis destinations.