Singapore Airlines has raised $500 million in its first US dollar bond issue, which the company will use to buy new aircraft as the global aviation industry prepares for a post-pandemic travel rebound.
The transaction's price was set at US treasuries plus 260 basis points, according to a statement from the airline.
The size of the 5.5 year deal was finalised after bookrunners received bids above $2.85 billion, and the bond carries a 3% coupon rate, the statement said.
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"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," it said.
There are 150 investors who bought into the deal, according to a term sheet seen by Reuters, and 76% of those are based in Asia.
The majority 83% of investors are fund and asset managers, the document said.
"The reality is that these businesses need capital, and the expectation is that there will be more debt issuances to come from the airlines," said one source, who has direct knowledge of the Singapore Airlines deal and spoke on condition of anonymity.
Airlines are growing increasingly optimistic that travel will resume later this year as a number of countries roll out vaccination campaigns to combat COVID-19.
Singapore Airlines is the first major airline in Asia to tap the global debt markets in 2021, following a rush of deals in the second half of 2020.
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. Global airlines are expected to refinance at least $14.9 billion worth of bonds set to mature in 2021, Dealogic data showed, while $23.1 billion in syndicated loans will become due this year.
Singapore Airlines has raised S$13.3 billion ($10.04 billion) in new liquidity in the current financial year which ends in March, it said in the statement.