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Ryanair Moves to Sell Eurobond to Scale Negative Effect of COVID-19 Pandemic

Ryanair Holding Plc (LON: RYA) is planning to sell its first Eurobond since 2017. With this, the company hopes to weigh investors’ willingness amid massive airline debt caused by the coronavirus pandemic.

According to unnamed sources, the Irish carrier will announce a potential five-year bond to investors on Monday. The chief financial officer (CFO) Neil Sorahan will lead the call as the company plans to raise 500 million euros ($592 million). Also, the bond-sale call is being arranged by Barclays Plc, Citigroup Inc, and BNP Paribas.

With the funds, the company hopes to cut debt-repayment risks through the next twelve months. Ryanair also aims to benefit from its rivals’ losses as the pandemic persists, the source revealed. A Ryanair spokesperson contacted by Bloomberg refused to comment on the recent development.

Since global airlines went on a break due to the pandemic, Finnair Oyj (OTC: FNNNF) is the only carrier to have visited Europe’s primary bond market. Last month, the airline paid 10.25%. 

Before now, Ryanair sold 400 million euros of its new stock last week and has an investment-grade rating. The carrier attained its BBB rating at the peak of the pandemic unlike its rivals, such as Deutsche Lufthansa AG and British Airways parent IAG.

According to Bloomberg data, Ryanair currently has outstanding bonds worth 2.45 billion euros. The report also revealed that the Irish company has an additional 850 million euro note due in June.

A press release by Fitch Ratings revealed:

“The new bond issue together with recently raised equity of about EUR 400 million will enhance the company’s solid liquidity and financial flexibility in a period of severe stress for the company and the sector driven by the pandemic.” 

Several companies recorded losses at the peak of the coronavirus pandemic. Globally, airports were shut and airlines were forced to ground planes. Similarly, Ryanair recorded losses as a result of the health crisis.

In May, the Irish airline announced it would cut off as much as 3,000 jobs and reduce employee pay. According to the company, there is a high probability that business will not return to its thriving status before the pandemic.

As the coronavirus persists, Ryanair’s chief executive Michael O’Leary highlighted some measures to survive through the crisis. Apart from extending the 50% pay cut until March 2021, Ryanair also enforced unpaid leave for employees. According to the announcement, the jobs and pay cut will mostly affect pilots and cabin crew.

Furthermore, O’Leary added that Ryanair may implement more cuts for a longer period of time, if the crisis persists.

Apart from an increase of 22.27% in the last twelve months, Ryanair’s stock has been declining. Since the beginning of 2020, the company has lost 19%. In addition to recent losses, the Irish carrier also fell nearly 8% in the past three months and 0.04% in the past month. Also, Ryanair dropped 6.32% in the last five days.

At the time of writing, RYA is trading at €11.8, a 2.24% loss over its previous close of €12.08.

Ryanair Moves to Sell Eurobond to Scale Negative Effect of COVID-19 Pandemic

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