Singapore Air mulls more debt points to potential dollar bonds

As Singapore Airlines considers broadening its debt sources amid plans to spend S$30.1b, some analysts are pointing to the likelihood of a shift to US-dollar bonds and the higher borrowing costs that may entail. CFO Stephen Barnes said on May 19 that the carrier is looking to raise funds in different currency bonds. “Frankly, we will want to diversify,” he said, without mentioning any specific currencies. While the local-currency market has been “quite receptive” to its issues, the airline is in “no pressing hurry” to diversify its funding and will take its time over the next year or so to look at options, Barnes said. It would be “natural” for Singapore Air to raise funds in US dollars given that the carrier’s capital commitments are denominated in that currency, according to Ajith Kom, analyst at UOB Kay Hian Pte. The brokerage is assuming some increase in borrowing costs for additional debt, Kom said. Should it decide to tap international debt markets, the choice of currency would be one factor in determining the cost of financing. All of the company’s outstanding notes are in Singapore dollars, where borrowing costs are on average lower than in the US-dollar debt market in Asia but higher than in the euro or yen. “Singapore Airlines has always maintained a modern fleet and the years ahead will see us taking delivery of many new-generation aircraft,” said a company spokesman. “Our capital expenditure will be rising as we take advantage of new growth opportunities.”<br/>