Cathay eyes $6b bond issue

Finance | Reuters 28 Jan 2021

Cathay Pacific Airways (0293) said yesterday it planned to sell five-year convertible bonds denominated in Hong Kong dollars, two days after the airline warned of rising cash burn due to tighter crew quarantine rules.

Cathay plans to issue HK$6 billion of bonds, though that could be subject to a significant upsizing, two sources with knowledge of the deal told Reuters.

The airline on Monday warned passenger capacity could be cut by about 60 percent, cargo capacity would fall by 25 percent and its monthly cash burn would rise if Hong Kong enacts new Covid-19 measures that would require flight crew to quarantine for two weeks upon their return home.

Cathay said the expected move would increase monthly cash burn by around HK$300 million to HK$400 million, on top of the current HK$1 billion to HK$1.5 billion.

Cathay yesterday told Hong Kong's stock exchange it planned to issue convertible bonds to provide funding for general corporate purposes but it did not provide details of the terms and said a deal was not guaranteed.

The bonds were being marketed with a coupon and yield-to-put/maturity of 2.25 percent to 2.75 percent and a conversion premium of 30 percent to 40 percent, according to IFR.

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