Cathay Pacific raises $650mn in US dollar bond issue

As it had pointed to in a preliminary term sheet last week, Cathay Pacific (CX, Hong Kong Int’l) has sold its first bond denominated in US dollars since 1996, raising USD650 million in the process. The senior unsecured notes, due in 2026, were issued with a yield of 4.875%, lower than the initial price guidance of 5.2%, suggesting significant demand, according to a term sheet issued late on May 10 that was seen by local media. Sources told the South China Morning Post that the airline could raise the size of the offer to USD650 million from USD500 million after investors lodged over USD1.3 billion worth of orders. The deal attracted pledges from 154 would-be investors. The cash-strapped carrier, which swung to a record HKD21.65 billion Hong Kong dollar (USD2.79 billion) net loss in 2020, will use the proceeds to strengthen its working capital and for general corporate purposes. Cathay Pacific has in the past issued almost all of its debt in Hong Kong dollars, and, as previously reported, it issued HKD6.74 billion (USD868 million) worth of convertible bonds in late January to help bolster liquidity. The new fundraising comes less than a year since the airline received a HKD39 billion (USD5 billion) bailout from Hong Kong’s government in June 2020. According to the South China Morning Post, Cathay Pacific has been burning through about HKD1.9 billion (USD245 million) a month.