Cathay Pacific tests investor appetite for first US dollar bond in 25 years

HONG KONG: Hong Kong’s Cathay Pacific Airways Ltd is considering issuing its first US dollar bond in nearly 25 years, according to a term sheet seen by Reuters.

The Covid-19 pandemic-ravaged airline will begin speaking to investors on Thursday to determine if a deal goes ahead for a US dollar Reg S bond, which means the debt cannot be sold to US-based investors.

The size of the issue is yet to be determined and will be set based on the demand for the bonds, according to a person familiar with the matter.

A final decision would be made on the issuance ‘subject to market conditions’, according to the term sheet.

“We continue to explore capital-financing opportunities if suitable market conditions arise,” Cathay said in an emailed statement to Reuters.

The airline contemplated a US dollar debt deal in 2019 - which would have been its first since 1996 - at the peak of the pro-democracy protests in Hong Kong but put it on hold because of the price demanded by investors.

The carrier has traditionally issued nearly all of its debt in Hong Kong dollars.