Singapore Airlines nets $632mn in bond issue, reworks fleet

Singapore Airlines Group has raised SGD850 million Singapore dollars (USD632 million) via a convertible bond issue placed with a range of institutional investors, it announced on November 13. The Singapore Airlines (SQ, Singapore Changi) parent said that the offer was more than four times oversubscribed and, as a result, it was increased from an initially mooted SGD750 million (USD557 million) to SGD850 million together with more attractive terms for the airline. The five-year bonds will carry a coupon rate of 1.625% and can be converted into ordinary shares at a price of SGD5.743 (USD4.268), which was 45.8% above the price when markets closed on November 12. Proceeds will be used to fund operations, capital expenditures, and debt payments. “This issuance further strengthens the company’s liquidity position and bolsters its ability to navigate the challenges posed by the impact of the Covid-19 pandemic on the business,” Singapore Airlines said in its statement. It added that “positive discussions have also taken place on aircraft sale-and-leaseback transactions, and the company will continue to explore other means to further strengthen our liquidity as necessary.” The flag carrier, which is majority-owned by the government’s Temasek Holdings, has now raised about SGD12.2 billion (USD9.1 billion) in liquidity since the start of the 2020/21 financial year in April. This consists of SGD8.8 billion (USD6.5 billion) from a Temasek-backed rights issue, SGD2 billion (USD1.5 billion) from secured financing, and a little over SGD500 million (USD370 million) from committed lines of credit and a short-term unsecured loan from financial institutions. Including the new lines of credit, the company will continue to have access to more than SGD2.1 billion (USD1.56 billion) in committed credit lines, it said. It also has the option of raising up to SGD6.2 billion (USD4.6 billion) in additional mandatory convertible bonds, an option that would be supported by Temasek and can be activated until July 2021. The announcement came a week after Singapore Airlines reported a record SGD2.34 billion (USD1.74 billion) net loss for the July-September quarter. Plunging passenger numbers due to Covid-19 pandemic saw revenues fall 81% to SGD783.8 million (USD582 million). Passenger capacity for the month of September was at 11% of the normal rate.