• Carrier raised cash via rights issue, bonds to cover expenses
  • Omicron dealt a blow to recovery in international travel

By Harry Suhartono and Ayai Tomisawa January 13, 2022

Singapore Airlines Ltd. became the first carrier to tap the debt market for dollars in 2022, raising funds at a discount to peers thanks to its government backing.

The flag carrier sold $600 million of seven-year bonds to yield 3.493%. That’s nearly a percentage point lower than the average yield at issuance for global airline notes sold in 2021, according to Bloomberg-compiled data. 

In 2021 Air Canada borrowed for five years at 3.875% while United Airlines Holdings Inc. had a 4.625% yield at issue for 8 years, the data show. 

Spread of Singapore Airlines' 2026 dollar bond tightens as travel resumes

Hard-hit like many of its peers due to the pandemic, the airline has sought to cover expenses by raising S$22.4 billion via a rights offering and by issuing debt. Singapore’s Temasek Holdings Pte is the largest shareholder.

The Singapore government’s decision last year to allow entry of fully-vaccinated people from two dozen countries has given the city state’s travel sector a lift.  

Singapore Airlines’s newly issued bonds “could offer value given its support from Temasek and ample liquidity, offset by a slower recovery due to the lack of a domestic market,” said Bloomberg Intelligence analyst Sharon Chen. 

Though still way below its pre-pandemic level, the number of passengers at Changi Airport rose over the course of 2021. Singapore Airlines recorded a “meaningful increase in traffic,” though the onset of the omicron coronavirus variant led to a temporary suspension of quarantine-free travel. 

Singapore Airlines isn’t the only Asian carrier looking to tap funds this week. Korean Air Lines Co. is marketing a Samurai bond, which is guaranteed by the Export-Import Bank of Korea, at 0.45%. It is to be priced on Friday.

— With assistance by Kyunghee Park