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Cathay Pacific raises US$650 million in first US-dollar bond sale in 27 years to fuel survival amid global air travel slump
- Hong Kong’s flag carrier raised US$650 million by selling a bond yielding 4.875 per cent, tighter than its initial price guidance of 5.20 per cent
- Airlines have sold a record US$21 billion worth of bonds so far this year as they grapple with the standstill in global travel
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Cathay Pacific Airways has raised US$650 million by selling a US-dollar denominated bond for the first time in about three decades as it battles to stabilise its finances amid a slump in international travel, according to a person familiar with the deal.
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Hong Kong’s flagship airline plans to use the bond proceeds as working capital and for general corporate purposes, according to a terms sheet seen by the South China Morning Post. The fundraising comes less than a year after the airline received a HK$39 billion (US$5 billion) bailout from Hong Kong’s government.
Cathay Pacific was one of the first and hardest hit airlines by the coronavirus pandemic, which quickly stymied global air travel after the first Covid-19 cases emerged in mainland China. Without a domestic flight network, the carrier relies on cross-border travel to more than 190 global destinations in more than 60 countries.
The affiliate of the conglomerate Swire Pacific and its bankers faced a stiff challenge selling the bond without offering a generous coupon given the parlous state of the issuer’s finances. Investors could not rely on guidance from major credit rating agencies, S&P Global Ratings, Moody’s or Fitch, as Cathay Pacific has not sought a rating from them.
The airline, which is burning through as much as HK$1.9 billion a month, talked with Asian and European fixed-income investors on May 6 and May 7 about where to pitch the price of the bonds.
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