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Lufthansa raises $1.2 billion in corporate bond sale By Reuters 

© Reuters. FILE PHOTO: Lufthansa planes are seen parked on the tarmac of Frankfurt Airport, Germany June 25, 2020. REUTERS/Kai Pfaffenbach/File Photo

By Yoruk Bahceli

(Reuters) – German airline Lufthansa raised 1 billion euros ($1.2 billion) in a corporate bond sale on Wednesday, boosting its finances after a state bail-out due to the COVID-19 pandemic.

Lufthansa, which was hit hard by the ensuing tourism crisis, had already issued a bond in February to repay part of last year’s 9 billion euro bailout from state lender KfW.

“The repeated successful placement of a corporate bond again confirms our access to a variety of advantageous financing instruments,” finance chief Remco Steenbergen said in a statement.

The company said it issued three and eight-year bonds, confirming an earlier Reuters report that cited a memo from a lead manager on the deal, becoming the latest of several major airlines to tap the debt markets.

The tranche with a term until 2024 bears interest of 2.0% per year, while it’s 3.5% for the tranche maturing in 2029, Lufthansa said.

The shorter-dated tranche received demand of over 900 million euros and the longer one 1 billion, according to the memo.

Among Lufthansa’s peers, Air France-KLM, easyJet (LON:), British Airways owner IAG (LON:) and Ryanair have all sold bonds this year as COVID-19 vaccinations have supported a brighter economic outlook and better prospects for the travel sector.

Lufthansa said it would use the proceeds to strengthen its liquidity. Citi, Credit Suisse (SIX:), HSBC and ING managed the transaction, according to an earlier memo.

Reuters reported in May that Lufthansa was sounding out investors about a capital increase worth roughly 3 billion euros, looking at either a June/July or September/October window, after shareholders approved a potential increase of up to 5.5 billion.

The company said on Wednesday preparations for a share sale were underway, adding no decision on the size and timing had been taken.

($1 = 0.8481 euros)

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