Etihad Airways, which is seeking to raise about US$1 billion from its first bond issue, is reportedly in talks with potential investors.
This month, the carrier received its first credit rating, paving the way to access capital markets amid a row with its American rivals over claims that it received billions of dollars in government subsidies to help it compete. Etihad and its Arabian Gulf peers, Emirates and Qatar Airways, deny the allegations.
Yesterday, Reuters quoted two sources as saying that Etihad was planning to launch its bond through a special purpose vehicle housing its equity stakes in global airlines.
It will use the proceeds to lend to its global partners, fund its own expansion plans and partly for general purposes, according to a source.
Etihad owns equity stakes in Alitalia, Virgin Australia, Air Berlin, and India’s Jet Airways, among others.
The airline, which expects to take delivery of 16 aircraft this year, was in advanced talks with Goldman Sachs and National Bank of Abu Dhabi to enlist them as lead arrangers for the bond issue, said two sources, adding that boutique firms ADS Securities and Anoa Capital were expected to be involved in the deal.
HSBC might also join as an arranger of the bond issue, which was likely to happen before the end of the third quarter, said Reuters.
“Talks are in the exploratory stage, and the company might issue a highly structured bond,” said a source, adding that the bond was likely to be rated as junk because it would not be guaranteed by Etihad.
Etihad declined to comment yesterday.
The “A” credit rating from Fitch reflected Etihad’s “extensive network, strong market position, favourable geographic hub location poised for growth and cost advantage”, Fitch said this month.
Etihad said it had raised more than $11bn in long-term funding from the global financial markets since 2003, including $3.7bn last year to finance its debt.
It said it had repaid about $5bn of its debt since 2003, including $800 million last year.
Last year, Etihad posted a 52 per cent rise in net profit to $73m from 2013, while revenue rose 26.7 per cent to $7.6bn.
* with reporting by Reuters
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