Ryanair’s bond draws E4b in orders as Covid fears swirl

Ryanair has become the first big European airline to sell a bond since the start of the pandemic, as investors shrugged off concerns about tightening travel restrictions in Europe. The carrier sold E850m of five-year bonds on Tuesday at a yield of 3%, after investors put in E4.4b worth of orders. Mark Lynagh, co-head of Emea debt markets at BNP Paribas, who worked on the deal, said the bond sale was an “opportunistic refinancing exercise”, as Ryanair has an E850m bond due to be paid back next summer. The deal underlined the hunger for yield from investors after drastic action from central banks this year cut interest rates to record lows. Ryanair’s is the first straight bond sale by a European carrier in that environment — but follows an issuance by Finnair, the Finnish airline, which last month raised E200m of hybrid debt with a 10.25% coupon in late August. One UK-based fund manager and investor in Ryanair said the Irish airline has “the best quality balance sheet” compared with its European peers, with E3.9b of cash at the end of June. The investor added that a long-term decline in business travel does not present a threat to the group. The budget carrier has maintained its triple-B, investment-grade credit rating during the pandemic, unlike rival airlines such as BA which sank further into “junk” territory yesterday after Moody's downgraded its owner IAG to Ba2. The rating agency cited IAG’s high exposure to long-haul and corporate travel. Tuesday’s bond sale by Ryanair followed a E400m raising of equity last week. “In an environment where it’s all about liquidity, they are in a very solid position,” said a banker working on the bond deal.<br/>