Singapore: Singapore Airlines Ltd. became the first carrier to tap the debt market for dollars in 2022, raising funds at a discount to peers thanks to its government backing.
The flag carrier sold $600 million of seven-year bonds to yield 3.493 per cent. That's nearly a percentage point lower than the average yield at issuance for global airline notes sold in 2021, according to Bloomberg data. In 2021 Air Canada borrowed for five years at 3.875 per cent while United Airlines Holdings Inc. had a 4.625 per cent yield at issue for 8 years, the data show.
Hard-hit like many of its peers due to the pandemic, the airline has sought to cover expenses by raising S$22.4 billion via a rights offering and by issuing debt. Singapore's Temasek Holdings Pte is the largest shareholder.
The Singapore government's decision last year to allow entry of fully-vaccinated people from two dozen countries has given the city state's travel sector a lift.
Singapore Airlines's newly issued bonds "could offer value given its support from Temasek and ample liquidity, offset by a slower recovery due to the lack of a domestic market," said Bloomberg Intelligence analyst Sharon Chen. Agencies