Etihad Airways is to launch a series of roadshows with potential investors in a US$1 billion bond issue it is planning in partnership with a group of airlines.
The meetings will be held in London and the Middle East over the next few days, organised by the US investment bank Goldman Sachs and two boutique advisers, ADS Securities of the UAE and United Kingdom-based Anoa Capital.
Goldman said in a “mandate announcement” that the issue would be made through a funding vehicle, EA Partners1 BV, set up by Etihad and five airlines in which it has equity investments. The five are Alitalia, airberlin, Air Serbia, Air Seychelles and Jet Airways.
A series of fixed income investor meetings would follow, Goldman said.
An Etihad spokesman declined to comment.
The airline has stressed the group nature of the bond issue, its first venture into the fixed-income debt markets alongside the other airlines. Some of the proceeds are to be used by the equity partners. The rest will go towards Etihad’s expansion plans.
The issue is expected to be arranged under regulation S of the American Securities and Exchange Commission rules, which govern bonds issued outside the United States.
The credit rating agency Fitch this year gave Etihad its first A rating, reflecting its “extensive network, strong market position, favourable geographic hub location poised for growth and cost advantage”.
Etihad said it had raised more than $11bn in long-term funding from the global financial markets since 2003, including $3.7bn last year to finance its debt.
It said it had repaid about $5bn of its debt since 2003, including $800 million last year.
Etihad last year posted a 52 per cent rise in net profit to $73m from 2013. Revenue rose 26.7 per cent to $7.6bn.
The bond issue comes as the row rumbles on between US and Arabian Gulf airlines over allegations of unfair subsidies.
In response to allegations that it had received $2.6bn in subsidies last year, Etihad said last month: “We have never made any secret of the fact that we have received equity capital and loans from our shareholder. That is completely normal for any business that has significant long-term capital commitments – for example for aircraft deposits.
Etihad Airways’ accounts are audited by KPMG and are fully compliant with international financial reporting standards.”
Emirates and Qatar Airways have also dismissed US accusations and levelled counter-allegations about billions of dollars of government subsidies allegedly received by US airlines over decades.
fkane@thenational.ae
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