Qantas sells $369mn of bonds in oversubscribed issue

Qantas Group has shown that it can still access long-term funding from the bond market, issuing 10-year unsecured bonds worth AUD500 million Australian dollars (USD369 million), the carrier said in a statement on September 1. The Qantas (QF, Sydney Kingsford Smith) parent confirmed the issue as part of the “ongoing management of its debt maturity profile,” it said. Once settled, the proceeds will strengthen short-term liquidity and then be used to pay AUD400 million (USD295 million) in bonds due to expire in June 2021. However, there has been little take-up of the company’s offer to buy back the latter bonds, with just AUD30 million (USD22 million) of the issue repurchased at the offer price, according to the Australian Financial Review. The coupon rate for the new bond, which Qantas said was oversubscribed, is 5.25%, significantly lower than the 7.5% funding it replaces. But it is higher than its last pre-pandemic issuance, in November 2019, an AUD425 million (USD314 million) 10-year bond with a coupon of 2.95%, Reuters reported. “Qantas is one of few airlines with continued access to long-term, unsecured bond markets. Access to this and other funding sources in recent months – including secured debt and equity markets – during the covid crisis reflects the national carrier’s strong overall position, the importance of aviation to its home market of Australia, and its clear recovery plan,” the group claimed in the statement. Qantas had AUD4.7 billion (USD3.5 billion) net debt as at June 30 and AUD4.5 billion (USD3.3 billion) available liquidity, the group said in its annual results statement published on August 20. In those results, it declared its worst-ever financial result, a AUD1.9 billion (USD1.4 billion) statutory after-tax loss.