Wizz Air’s debut bond takes off in sign of hot debt markets

Wizz Air is set to pay borrowing costs of little over 1% on its debut bond, underscoring how buoyant credit markets remain in the face of fresh lockdowns and the spread of a new virus variant in Europe. The London-listed Hungarian carrier followed a string of European companies that have issued debt at low interest rates in the first two weeks of 2021, highlighting investors’ confidence in central banks’ ability to mitigate the protracted economic fallout from the coronavirus crisis. Wizz Air’s three-year deal shows how fund managers are increasingly willing to buy bonds from even deeply-troubled sectors such as the airline industry, where activity has ground to a near halt for the best part of the year, in the search for any form of returns. In December 2020, 665,722 passengers travelled with Wizz Air, an 80% drop compared with the same month in 2019, according to the company's figures. The European corporate bond market has experienced a frenzied start to the year, with investment-grade rated companies, those at the higher end of the ratings scale, borrowing at historically low yields from investors flush with cash. German energy company Eon raised €600m at a coupon of 0.1% earlier this week, while Swiss engineering group ABB was able to borrow E800m with no interest payments. “Available funding costs have never been better,” said Mark Lynagh, co-head of Emea debt markets at BNP Paribas.<br/>