Lufthansa freezes hybrid bond payment coupons to follow EU rules

State aid packages to help airlines stay afloat during the pandemic are causing pain months later for investors who’ve been told they won’t be collecting interest on Deutsche Lufthansa AG bonds. The German airline said Wednesday that it will suspend coupon payments on E500m of junior-ranking notes to comply with EC rules. Once the aid package expires, the company will make up for the lost interest, it said. The event was seen as a one-off stemming from an effort by the EU to level out the playing field where state-supported airlines enjoy an advantage over rivals. The bonds have already recovered from the news, which initially caused them to slump more than 8 cents. They were bid at 96.1 cents on the euro Thursday, according to Bloomberg data. The suspension is not related to the company’s liquidity or credit stress and “is a specific and isolated case,” said Andrea Seminara, chief executive at Redhedge Asset Management. “We think corporate hybrids coupon deferral risk continues to remain low.”<br/>