Ryanair Lands €850m As European Airline Bonds Begin To Take Off

By Dave Simpson
Ryanair Lands €850m As European Airline Bonds Begin To Take Off

Ryanair has sold an €850 million bond, its first in three years, in a sign that European debt markets are starting to reopen to airlines, which were crippled by the coronavirus crisis.

Investors put in €4.4 billion of orders for the bond, which was more than five times the amount that Ryanair was seeking to raise, a lead manager memo seen by Reuters showed.

Ryanair's balance sheet, which is one of the strongest in the industry with more than €3.9 billion of cash as of June 30, 2020, and aircraft worth approximately €7 billion, was behind investor demand, analysts said.

Ryanair also raised €400 million euros from shareholders last week.

"Ryanair is in a better place, therefore it's going to be easier for it to get the financing it wants," Azhar Hussain, head of global credit at Royal London Asset Management, said.

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It is one of three airlines, together with easyJet and Southwest Airlines, that still holds investment grade ratings, ratings agency S&P said in August, noting that all three are low-cost carriers.

S&P said that it considers Ryanair to be one of the financially strongest airlines as it removed its 'BBB' rating - two notches above "junk" status - from 'credit watch' on Monday September 7, making an imminent downgrade less likely.

Ryanair's bond, pricing at a yield of 3%, will pay a coupon of 2.875%, the lead manager said.

That is more than double what Ryanair paid for longer debt in 2017, but a fraction of the yields of more than 12% which its bonds hit in March.

"To me, [Ryanair] says that the door is wide open for deals," Daniel Ender Aizencang, ABN AMRO fixed income strategist, said.

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Refinance

Ryanair, which hired Barclays, BNP Paribas and Citi to manage the sale, will use part of the proceeds to refinance an €850 million bond due in June 2021, a banker who worked on the deal said.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.