Cathay Pacific sells convertible bonds to buttress finances as air travel remains in the doldrums amid lingering Covid-19 pandemic
- The airline sells convertible bonds with a guaranteed coupon of 2.75 per cent
- Hong Kong’s largest airline warned Monday it may cut passenger flight capacity by almost two-thirds
Cathay Pacific Airways is planning one of its biggest bond sales to buttress its finances as Hong Kong’s hometown airline struggles to ride out the travel slump forced by the global coronavirus pandemic.
The HK$6.74 billion (US$869 million) five-year convertible bonds maturing in February 2026 will be offered at par with a coupon of 2.75 per cent, the top end of the marketing range of 2.25 per cent and 2.75 per cent payable twice a year, according to people familiar with the transaction.
The bonds can be converted into the airline’s Hong Kong-traded shares, at a premium of 30 per cent over the reference price of HK$6.59 per share. The bonds were marketed at a premium between 30 per cent and 40 per cent. Cathay Pacific sold an additional US$155 million of the bond above the base size of the deal. BNP Paribas, BOC International, HSBC and Morgan Stanley are working on the deal.
The convertible bond marks another attempt to shore up its finances after an abrupt 27 per cent increase in its monthly cash burn to HK$1.9 billion, as the global coronavirus pandemic drags on and adds to the worldwide slump in travel demand.
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Cathay Pacific Airways announces its largest job cuts in history
Cathay Pacific, which shut its Cathay Dragon unit last year and made 5,900 jobs redundant to save HK$500 million every month, said on Monday it may have to axe a quarter of its profitable cargo capacity because a 14-day quarantine and seven-day medical surveillance proposed by Hong Kong’s government would force it to cut its flight capacity by almost two-thirds.
