Deutsche Lufthansa AG, widely dubbed as Lufthansa, the 68-year old second-largest carrier in the 26-member bloc, said late on Thursday that the German aviation giant had issued a €1.6 billion in bonds in a bid to reimburse part of a bailout package which it had shelved last year as part of a bailout package proffered by state lender KfW to grapple with a pandemic-led sharp downturn in air travels.
Besides, according to a lead manager on the deal, the Germany’s largest carrier had sold off €750 million worth of four-year bond at a yield of 3 per cent, while the eurozone’s second-largest carrier had also issued an €850 million worth of seven-year bond at a rate of 3.875 per cent.
Apart from that, sources familiar with the bond issuance had added that the latest move from Lufthansa to raise as many as €1.6 billion in debts, would more likely to grab attentions for bond investors as ECB’s (European Central Bank) bond repurchase program had been suppressing yields across the region adding “These are pretty alluring levels for bond investors starved of any kind of yield and prepared to invest in a fundamentally strong credit hit by the crisis; a typical ‘fallen angel’ play.
Lufthansa may capitalize on further monetary tools to repay Govt. debts
In factuality, at the peak of a still-raging pandemic outbreak in Europe earlier last year, Lufthansa had secured a roughly €10 billion in bailout packages from the German Government in exchange for a minority stake in the airlines.
Nonetheless, industry analysts widely appreciated the latest Lufthansa move to slash its debt-loads. However, adding that the German aviation industry mogul might install other elements to repay the Govt. debt, Lufthansa Chief Financial Officer (CFO) Remco Steenbergen said in a separate statement following the announcement, “We are very grateful for the support we receive in our home markets.
Today’s successful bond placement allows us to repay the entire KfW loan. Despite the repayment, however, it is likely that we will draw additional elements of the stabilization package which are currently unused. The extent of the utilization will depend on the further course of the pandemic”.