South Korea’s Jeju Air has issued subordinated perpetual bonds which will allow for interest deferral and contain interest rate step-up provisions, with the first coupon payment scheduled for October 29, 2025.
According to a securities filing, interest on the bonds will be calculated from the issuance date until maturity, with payments made quarterly on the 29th of every third month
The bonds carry a fixed annual coupon of 6.50% until July 29, 2027, after which the rate will increase by a step-up margin of 2.00 percentage points. An additional 2.00% step-up applies if there is a change in the company’s major shareholder and the company opts not to redeem the bonds early.
Jeju Air may also redeem the bonds early under certain accounting or tax-related conditions, such as changes to Korea’s International Financial Reporting Standards or tax rules that would impact the bond’s classification or deductibility.
Principal will be repaid in full at maturity, currently set for July 29, 2055. The company has the option to extend maturity in 30-year increments.
In May, the airline posted an operating loss of 32.6bn Korean won ($23.2 million) during the first quarter of the year, down significantly from an operating profit of 78.9 billion won ($56.3 million) that was recorded during the same period of the prior year.