Corporate Debt Restructuring Masterclass

18 July 2022 (Mon), 5pm Singapore/HK time

Hong Kong’s flag carrier Cathay Pacific announced on Wednesday that it is planning to sell 5Y convertible bonds denominated in Hong Kong dollars to shore up cash. The airline is looking to raise HKD 6bn ($774mn) with an option to upsize the deal further via 5Y convertibles at a coupon and yield of 2.25-2.75% and a conversion premium of 30-40% as per IFR. The issuance comes on the back of expectations of greater cash burn for the airline if Hong Kong goes through with further pandemic-related measures that involve flight crew having to quarantine for two weeks. This could widen its monthly cash burn by HKD 300-400mn ($39-52mn) on top of the current burn of HKD 1-1.5bn ($129-194mn), the airline warned. Cathay had received a rescue package of $5bn from the Hong Kong government last June in a bid to keep the carrier afloat. Before that, Cathay had raised S$175mn ($132mn) via 3.375% bonds due 2023 in January 2020 that are currently trading at 96.66 yielding 5.18% on the secondary markets.

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