Qantas has issued an AUD $500 10-year unsecured bond issue after holding talks with potential investors last week.
The bonds were priced at 5.25%, lower than a number of other carriers which have recently accessed capital markets. The airline said in a statement that the 10-year issue was oversubscribed. The interest rate is higher than its last pre-COVID 19 issue - a A$425 million, 10-year bond with a coupon of 2.95% in November.
The latest bond was expected to be rated by Moody’s at Baa2 with a negative outlook, according to the marketing materials seen by Reuters.
The Australian carrier is one of the last globally to retain an investment grade rating and the pricing of its debt compares favourably with Southwest Airlines which issued $1.3 billion of seven-year bonds with a 5.125% coupon in June.
Qantas said it would use the funds in part to pay off A$400 million of bonds with a 7.5% coupon due to mature in June 2021, its only near-term maturity.
Citi, Commonwealth Bank, National Australia Bank and Westpac are the joint lead managers.