Qantas Sells A$500m Of Bonds To Boost Liquidity And Refinance
Qantas Airways Ltd has said that it has issued A$500 million of unsecured bonds with a coupon of 5.25% to help strengthen liquidity and replace maturing debt as it deals with plunging demand due to the coronavirus pandemic.
The airline said in a statement that the 10-year issue is oversubscribed. The coupon rate is higher than its last pre-pandemic issuance of a A$425 million, 10-year bond with a coupon of 2.95% in November.
The new issue is expected to be rated by Moody's at Baa2 with a negative outlook, according to the marketing materials seen by Reuters.
Qantas is one of the few airlines in the world to retain an investment grade rating during the pandemic. Southwest Airlines Co, also investment grade, issued $1.3 billion of seven-year bonds with a 5.125% coupon in June.
Qantas said that it will use the funds in part to pay off A$400 million of bonds with a 7.5% coupon due to mature in June 2021, its only near-term maturity.
Those were issued in June 2014, when it was struggling financially and had lost its investment grade rating ahead of a successful turnaround plan that saw it restored.
To help weather the coronavirus crisis, which has stopped it flying international services and severely cut its domestic operations, Qantas raised A$1.5 billion of equity in June. It has also raised debt secured over some of its aircraft to give it extra liquidity.
Last month, the airline told investors that it retained A$2.5 billion of unencumbered assets, including 46% of its fleet, land and spare engines.