Qantas has announced it has completed an oversubscribed $500 million bond refinancing.
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The bond offer resulted in 6 times as many subscriptions as were available, according to the company’s statement.
Qantas said this is the strongest response to a bond offer in its history. The company said this reflects the market’s confidence in its recovery plan and market position.
Qantas released the non-price sensitive news after the ASX closed yesterday. Right now, the Qantas share price is $5.50, which is 0.92% higher than its previous close.
Let’s take a closer look at yesterday’s announcement from Australia’s largest airline.
Qantas secures $500 million of debt
The Qantas share price is gaining today on news of the company’s latest bond refinancing.
The 7-year $500 million unsecured bond was issued to refinance an existing $300 million bond. The original bond is due to mature in May 2022.
According to Qantas, it initially planned to simply replace the $300 million bond. However, it boosted the offer by $200 million after it was heavily oversubscribed.
In fact, the bond offer was 6 times oversubscribed, boasting a bookbuild of about $1.9 billion.
The bond will give the company more cheap debt to put towards increasing its liquidity, repaying maturing debt, and repairing its balance sheet.
The unsecured bond has a rate of 3.15%. That’s significantly less than the 7.75% rate of the maturing bond.
The airline expects that both domestic and international travel restrictions will begin to ease before the end of 2021.
It’s planning to start taking off to some international destinations in December. The Qantas share price has gained 12.9% since it announced its plan to restart international flights.
Qantas hopes the resulting income will help it get back to its target net debt range by the end of this financial year.
Qantas share price snapshot
The Qantas share price is 12% higher than it was at the start of 2021. It has also gained 38.9% since this time last year.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.
The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.