Upbeat Singapore Airlines raises $500 million in bond issuance

Carrier accumulates $10 billion war chest as border controls, quarantine requirements and a near-worldwide resurgence of the coronavirus limit passenger and cargo growth

Upbeat Singapore Airlines raises $500 million in bond issuance
The Singapore Airlines group has maintained an optimistic note despite plunging passenger and cargo figures. Since the start of the 2020/2021 financial year, the group has raised about $10 billion in additional liquidity. Photo: Reuters.

(ATF) Singapore Airlines (SIA) said on January 14 that it had raised $500 million in a bond issuance, signalling confidence despite plunging air travel due to the coronavirus pandemic.

The proceeds will be used for aircraft purchases, related payments and other general purposes including refinancing of existing borrowings, the airline said.

"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," chief executive Goh Choon Phong said in a statement.

The bonds have an issue price of 99.573% of their principal amount, with a maturity date of July 20 2026, and will carry an annual coupon of 3%. Citigroup was the sole global coordinator for this issuance. Citigroup, HSBC and BofA Securities were the joint bookrunners.

Since the start of the 2020/2021 financial year, the SIA group has raised about $10 billion in additional liquidity from a rights issue, secured financing, convertible bond issue, private placement of new 10-year bonds, and lines of credit and a short-term unsecured loan.

“We thank our investors for their strong support of Singapore Airlines’ debut issuance of US-dollar bonds. 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,” said Goh.

Optimism abounds

The SIA group has maintained an optimistic note despite plunging passenger and cargo figures. Strict border controls and quarantine requirements as well as a resurgence of the virus in the northern hemisphere have limited demand.

However, SIA said passengers “continued to gradually return” as the group carried 85,200 people across Singapore Airlines, regional brand SilkAir and low-cost carrier Scoot in December. While that was 97.6% lower than in the same period in 2019, it was an improvement over the 61,400 passengers carried in November.

SIA added 46 per cent more capacity in December compared with November and forecasts passenger capacity of 25 per cent of pre-pandemic levels by March 31. “In line with Singapore’s progressive re-opening, as well as the gradual vaccination of the population across the world, we expect to see a measured expansion of the passenger network,” the airline group said this week.

Cargo traffic fell 25.5 per cent as capacity dropped by more than 50 per cent. The group said it has been preparing to distribute vaccines in 2021, calling this the “one of the biggest and most complex public-private logistical tasks in recent history”.

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