PAL raises $300M from int’l bond offer

MANILA, Philippines – Philippine Airlines (PAL) has raised $300 million through its inaugural fixed-rate international bond offering, providing the flag carrier with a new funding source as it presses ahead with its service and fleet expansion.

In a disclosure on Wednesday, PAL Holdings Inc. said its wholly owned subsidiary, Primero Agila Ltd., had successfully priced the five-year senior notes at a fixed coupon rate of 7.75 percent.

READ: PAL maintained first-quarter profit despite Mideast woes

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This issuance carries a yield of 8 percent and a re-offer price of 98.986.

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Structured as five-year non-call two-year senior notes, they will be listed on the Singapore Exchange Securities Trading Ltd. and will be guaranteed by Philippine Airlines Inc. and its affiliate, Air Philippines Corp.

These dollar-denominated notes will mature on July 16, 2031, with settlement scheduled on July 16, PAL said.

They carry expected ratings of Ba2 from Moody’s and BB from Fitch, in line with the airline’s corporate credit ratings.

In March, the Lucio Tan-led flag carrier secured a Ba2 rating from Moody’s Ratings with a stable outlook, remaining below investment grade.

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READ: PAL gets ‘Ba2’ credit rating from Moody’s

Another debt watcher, Fitch Ratings, followed in June with a BB rating and a stable outlook, citing the airline’s improving financial profile despite risks from the Middle East conflict, which it said could weigh on travel demand and earnings.

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PAL first announced plans for the offering in late June, when it appointed Deutsche Bank as sole global coordinator and BNP Paribas as joint bookrunner to arrange a series of investor meetings across Asia, Europe, the Middle East, Africa and the United States before launching the sale.

This fundraising comes as PAL continues with its expansion plans following the financial restructuring triggered by its voluntary Chapter 11 bankruptcy filing in 2021.

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Recently, the flag carrier announced it would increase flight frequencies to New York, Toronto and Vancouver, while also adding services to Japan and Australia ahead of the year-end travel season. INQ