Philippine Airlines has raised $300 million from its first international bond offering, marking a major step in the flag carrier’s efforts to fund its fleet modernization program and support long-term expansion.
The fixed-rate bond was issued through PAL’s wholly owned subsidiary, Primero Agila Limited, and carries a 7.75 percent coupon. It will be listed on the Singapore Exchange Securities Trading Limited.
The transaction is expected to settle on or about July 16, subject to customary closing conditions.
PAL said the bond is unconditionally and irrevocably guaranteed by Philippine Airlines Inc. and Air Philippines Corp.
Investor demand was strong, with the final order book exceeding $1.4 billion. This resulted in the offer being approximately 4.5 times oversubscribed.
According to PAL, the strong response from a diversified global investor base reflects renewed confidence in the airline’s operational and financial recovery following its restructuring, as well as its long-term growth prospects.
The transaction also marked several milestones for PAL and the Philippine capital market. The airline said it is the first high-yield bond offering rated by a Philippine issuer in more than a decade, the first unsecured high-yield bond issued by an Asian airline, and the first rated airline bond issuance from South and Southeast Asia.
PAL Holdings Inc. President Lucio C. Tan III said the successful pricing of the transaction reflects the airline’s progress in recent years.
“This landmark bond offering is a powerful affirmation of Philippine Airlines’ transformation and the confidence that global investors have in our long-term vision and growth ambitions. This allows us to strengthen our network and continue to elevate the travel experience for our customers. It reinforces Philippine Airlines’ role in promoting tourism, trade, investment and economic growth for the Philippines,” Tan said.
PAL President Richard Nuttall said the airline’s inaugural international bond offering marks a defining milestone in its continuing transformation.
“We are grateful for the overwhelming support we received from investors globally, which we see as a vote of confidence in PAL’s long-term strategy, market position and growth outlook,” Nuttall said.
Deutsche Bank served as Sole Global Coordinator and Rating Advisor, while Deutsche Bank and BNP Paribas acted as Joint Bookrunners for the transaction.