* Bond has coupon of 5.25%, up from 2.95% issue in Nov 2019
* Will replace A$400 mln of bonds with 7.5% coupon
* One of world's few airlines with investment grade rating
SYDNEY, Sept 1(Reuters) - Qantas Airways Ltd said
on Tuesday it had issued A$500 million ($369.90 million) of
unsecured bonds with a coupon of 5.25% to help strengthen
liquidity and replace maturing debt as it deals with plunging
demand due to the coronavirus pandemic.
The airline said in a statement that the 10-year issue was
oversubscribed. The coupon rate is higher than its last
pre-pandemic issuance of a A$425 million, 10-year bond with a
coupon of 2.95% in November.
The new issue was expected to be rated by Moody's at Baa2
with a negative outlook, according to the marketing materials
seen by Reuters.
Qantas is one of the few airlines in the world to retain an
investment grade rating during the pandemic. Southwest Airlines
Co, also investment grade, 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.
Those were issued in June 2014, when it was struggling
financially and had lost its investment grade rating ahead of a
successful turnaround plan that saw it restored.
To help weather the coronavirus crisis, which has stopped it
flying international services and severely cut its domestic
operations, Qantas raised A$1.5 billion of equity in June. It
has also raised debt secured over some of its aircraft to give
it extra liquidity.
The airline last month told investors it retained A$2.5
billion of unencumbered assets, including 46% of its fleet, land
and spare engines.
($1 = 1.3517 Australian dollars)
(Reporting by Jamie Freed; additional reporting by Wayne Cole;
Editing by Kim Coghill)