Sri Lanka's national carrier issues $175m bonds in re-fleeting effort

GMT 16:42 2014 Monday ,30 June

Arab Today, arab today Sri Lanka's national carrier issues $175m bonds in re-fleeting effort

Sri Lanka's national carrier
Colombo - XINHUA

Sri Lanka's national carrier SriLankan Airlines has issued 175 million U.S. dollars worth of international bonds, with proceeds to be used to facilitate a 1.3- billion-U.S.-dollar re-fleeting program, the company said in a statement Monday.
Last year, the loss-making carrier signed a provisional deal with Airbus worth 1.3 billion U.S. dollars to buy six A330-300 and four A350-900 aircraft between 2014 and 2023 to replace its ageing aircraft.
The bond, the first of its kind ever issued by SriLankan Airlines, will be due in 2019 carrying a 3.5 percent interest, the statement said.
"This is the lowest rate achieved to date, in the international market, by a Sri Lankan corporate or bank. The proceeds from the bond will help support the carrier's re-fleeting and working capital requirements," it added.
The bond was promoted through an international road show covering Singapore, Hong Kong and London.SriLankan Airlines insisted it was able to price the U.S. dollar transaction at a very competitive rate despite a modest size of issuance.
The order book witnessed exceptionally good interest from institutional investors.
The final order book was 3 billion U.S. dollars from 85 participants and was oversubscribed by 17 times.
SriLankan Airlines now operates with a 22-aircraft fleet including seven A320-200s, seven A330-300s, six A340-300s and two Twin Otters.
The airlines will work with a leasing firm which would buy the aircraft and lease them back to the carrier as it does not have sufficient funds to purchase the aircraft directly from Airbus.
SriLankan is looking at a lease period of 10 to 15 years, with a shorter period for the A330-300s and a longer period for the A350-900s.
The airlines also hopes to break even in 2016 despite significant losses since it was bought back by the Sri Lankan government from United Arab Emirates in 2008.

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