Flush with cash, Singapore Airlines to spend $2.7 bln redeeming convertible bond

Singapore Airlines said on Tuesday its strong cash position would allow it to spend S$3.86b ($2.71b) to redeem convertible bonds issued in 2020 that helped it weather the halt in travel during the pandemic. The airline said that the bonds, which have a conversion price below the current share price, had become its most expensive form of financing even though interest rates were rising. The bonds with a principal amount of S$3.5b were issued as part of a broader S$19b financial rescue package backed by the airline's majority shareholder, state fund Temasek Holdings. By June 30 this year, as borders opened and travel demand rebounded, the airline had a cash balance of S$16.1b. It reported the second highest quarterly operating profit in its history in the June quarter. The bond redemption, to occur in December at 110.4% of the principal amount, will be funded from existing cash reserves, SIA said. The airline had raised an additional S$6.2b in liquidity through a separate issue of mandatory convertible bonds in 2021. It has not announced plans to redeem those at this stage.<br/>