‘Nat­u­ral’ op­tion as air­line’s cap­i­tal com­mit­ments are de­nom­i­nated in US cur­rency, says an­a­lyst

New Straits Times - - Business -


AS Sin­ga­pore Air­lines Ltd (SIA) con­sid­ers broad­en­ing its debt sources amid plans to spend S$30.1 bil­lion (RM94.4 bil­lion), some an­a­lysts are point­ing to the like­li­hood of a shift to US dol­lar bonds and the higher bor­row­ing costs that may en­tail.

Chief fi­nan­cial of­fi­cer Stephen Barnes said on May 19 that the car­rier is look­ing to raise funds in dif­fer­ent cur­rency bonds.

“Frankly, we will want to di­ver­sify,” he said, with­out men­tion­ing any spe­cific cur­ren­cies. While the lo­cal-cur­rency mar­ket has been “quite re­cep­tive” to its is­sues, the air­line is in “no press­ing hurry” to di­ver­sify its fund­ing and will take its time over the next year or so to look at op­tions, Barnes said.

It would be “nat­u­ral” for SIA to raise funds in US dol­lars given that the car­rier’s cap­i­tal com­mit­ments are de­nom­i­nated in that cur­rency, ac­cord­ing to Ajith Kom, an­a­lyst at UOB Kay Hian Pte.

UOB is as­sum­ing some in­crease in bor­row­ing costs for ad­di­tional debt, said Kom.

Should it de­cide to tap in­ter­na­tional debt mar­kets, the choice of cur­rency would be one fac­tor in de­ter­min­ing the cost of fi­nanc­ing. All of the air­line’s out­stand­ing notes are in Sin­ga­pore dol­lars, where bor­row­ing costs are on av­er­age lower than in the US­dol­lar debt mar­ket in Asia but higher than in the euro or yen.

“SIA has al­ways main­tained a mod­ern fleet and the years ahead will see us tak­ing de­liv­ery of many new-gen­er­a­tion air­craft,” said Ni­cholas Ionides, a com­pany spokesman in an email.

“Our cap­i­tal ex­pen­di­ture will be ris­ing as we take ad­van­tage of new growth op­por­tu­ni­ties.”

In­vest­ments will be fi­nanced by cash flows from op­er­a­tions and an in­crease in debt in the com­ing years, said Ionides. Bloomberg


Sin­ga­pore Air­lines Ltd is look­ing to di­ver­sify its fund­ing and will take its time over the next year or so to look at op­tions.

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