Lufthansa raises E1.6b to repay German government aid

Lufthansa said it had issued a E1.6b bond Thursday, money that will be used to repay part of a bailout given last year by state lender KfW to help it cope with the COVID-19 crisis. “We are very grateful for the support we receive in our home markets. Today’s successful bond placement allows us to repay the entire KfW loan,” Lufthansa CFO Remco Steenbergen said. “Despite the repayment, however, it is likely that we will draw additional elements of the stabilization package which are currently unused. The extent of the utilization will depend on the further course of the pandemic,” he added. The airline was set to sell E750m of four-year debt at a yield of 3% and E850m of seven-year debt at 3.875% on Thursday, a lead manager on the deal said. At the height of worries around the COVID-19 crisis’s impact on the airlines sector a year ago, Lufthansa’s September 2024 bonds were yielding as much as 6.52%, so this represents a good rate for the airline, another source close to the deal said. But he added that for bond investors, these yields looked attractive with the European Central Bank’s bond purchasing programme compressing yields across the board. “These are pretty alluring levels for bond investors starved of any kind of yield and prepared to invest in a fundamentally strong credit hit by the crisis; a typical ‘fallen angel’ play,” he said, a phrase used to describe companies that have recently lost their investment grade status.<br/>