|Bid||0.0000 x 0|
|Ask||0.0000 x 0|
|Day's Range||4.1400 - 4.2500|
|52 Week Range||3.2500 - 6.6100|
|Beta (5Y Monthly)||1.31|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||0.50 (12.04%)|
|Ex-Dividend Date||Aug 12, 2020|
|1y Target Est||N/A|
Hong Kong’s flagship carrier sold its first dollar bonds in more than two decades, seizing on investors’ willingness to fund airlines as the industry’s prospects improve.
Cathay Pacific Airways has raised US$650 million by selling a US-dollar denominated bond for the first time in about three decades as it battles to stabilise its finances amid a slump in international travel, according to a person familiar with the deal. Hong Kong's flagship airline plans to use the bond proceeds as working capital and for general corporate purposes, according to a terms sheet seen by the South China Morning Post. The fundraising comes less than a year after the airline received a HK$39 billion (US$5 billion) bailout from Hong Kong's government. Cathay Pacific was one of the first and hardest hit airlines by the coronavirus pandemic, which quickly stymied global air travel after the first Covid-19 cases emerged in mainland China. Without a domestic flight network, the carrier relies on cross-border travel to more than 190 global destinations in more than 60 countries. Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team. The affiliate of the conglomerate Swire Pacific and its bankers faced a stiff challenge selling the bond without offering a generous coupon given the parlous state of the issuer's finances. Investors could not rely on guidance from major credit rating agencies, S&P Global Ratings, Moody's or Fitch, as Cathay Pacific has not sought a rating from them. The airline, which is burning through as much as HK$1.9 billion a month, talked with Asian and European fixed-income investors on May 6 and May 7 about where to pitch the price of the bonds. After gathering feedback, Cathay Pacific started marketing the 5.25-year senior unsecured bond with initial price guidance of 5.20 per cent on Monday morning, according to a terms sheet seen by the South China Morning Post. The city's dominant carrier was able to raise the size of the offer from US$500 million to US$650 million after investors lodged over US$1.3 billion worth of orders, according to a person familiar with the matter. Cathay Pacific was able to price the bond at 4.875 per cent, tighter than the initial guidance, the person familiar with the deal said late on Monday. The deal attracted pledges from 154 would-be investors. Cathay Pacific and its bankers allocated 88 per cent of the bonds to Asia-based investors, 10 per cent to European accounts and 2 per cent to offshore US investors. About 22 per cent of the bonds went to banks and private-banking clients, while 78 per cent ended up with asset and fund managers, according to a terms sheet seen by the Post on Tuesday. Moody's changed its outlook for the global airline industry to positive from negative on Tuesday, reflecting its expectation that air travel will restart later this year as coronavirus vaccinations around the globe allow governments to lower barriers to entry for visitors and reentry for residents returning home. Cathay Pacific Airways' executives: Chief Executive Officer Augustus Tang (second left), Chairman Patrick Healy (centre) and Chief Financial Officer Ronald Lam (second right), on March 11, 2020. Photo: SCMP alt=Cathay Pacific Airways' executives: Chief Executive Officer Augustus Tang (second left), Chairman Patrick Healy (centre) and Chief Financial Officer Ronald Lam (second right), on March 11, 2020. Photo: SCMP Airlines globally have sold US$21.1 billion worth of bonds so far this year, a record for the period according to Refinitiv which started compiling data in 1998. The industry also amassed US$35.4 billion of debt last year, again an all-time high, as the coronavirus pandemic plunged the industry into its worst crisis ever. Singapore Airlines issued its first US-dollar denominated bond in January, pricing the notes maturing in 2026 at 3 per cent, lower than Cathay Pacific's coupon. The Lion City's flag carrier benefits from backing by Temasek Holdings, an investment arm of the Singaporean government. As another benchmark for investors, Cathay Pacific pointed to its five-year convertible bond issuance, announced in January. The 2026 convertible bond traded on Friday at 105.066 with a yield of 1.633. The carrier, the recipient of the Hong Kong government's largest private-sector bailout last June, reported a record loss of HK$21.6 billion in 2020. Cathay Pacific, a founding member of the OneWorld alliance of global carriers, was the world's fifth-largest airline by sales as of 2016. Prospects for 2021 remained uncertain, the airline's chairman Patrick Healy said in March, describing the past 12 months as "the most challenging" period in the carrier's 70-year history. Cathay Pacific offered its Hong Kong-based pilots, cabin crew and airport staff voluntary redundancy last month as part of its cost-cutting plans, and warned that business is not improving under the "devastating impact" of the pandemic. Cathay Pacific was saved last June by a HK$39 billion bailout from the government, arranged by Financial Secretary Paul Chan Mo-po, but despite one of the most expensive rescues in the city's history, the airline has had to continue to tap private investors for capital. The airline has sold Hong Kong-dollar denominated fixed-income products to private-markets investors but has not issued a US-dollar bond since about 1994 when it also issued a five-year unsecured bond. Over the years, it has largely been able to rely on cheaper bank loans from Hong Kong's largest financial institutions, such as HSBC. However, since the crisis erupted, it has had to diversify its funding sources to stay afloat. Unsecured bonds are not backed up by some form of collateral. Investors can only rely on the company's promise to pay a coupon annually and repay the principal when the bond matures. Cathay Pacific mandated Bank of China's Hong Kong unit, Citigroup, HSBC and SMBC Nikko as joint lead managers and joint bookrunners on the deal. This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.
The decision to close the Canadian base is final, while Australia and New Zealand is a proposal at this stage and will involve a good-faith consultation process with employees, Cathay said. In Australia and New Zealand, employers must consult with staff before redundancies as part of union agreements but it is rare for publicly announced decisions to be reversed. Qantas Airways Ltd and Air New Zealand Ltd made similar announcements last year about consultations before proceeding with their planned staff cuts.