Dubai: Following strong demand, Emirates has launched a five-year, $1 billion (Dh3.67 billion) bond, to be listed on the London Stock Exchange (LSE), according to market sources. The airline was initially planning to raise around $750 million from the bond sale.
When asked for a confirmation, an Emirates spokesperson told Gulf News: “We are still waiting on the final market response which will dictate whether we go ahead with the bond.”
The airline intends to use the money as a “security measure” to meet its obligations when the need arises, Emirates President Tim Clark said earlier this week. The carrier stated in its preliminary prospectus for the planned bond sale that the net proceeds of the issue will also be used for “general corporate purposes”.
According to bankers quoted by news agencies, a strong response from investors allowed the airline to offer a spread of 330 basis points over five-year mid swaps. The airline, which met fixed income investors in road shows in Hong Kong, Singapore, the UAE, London and Switzerland in the past few days, picked Emirates NBD, Deutsche Bank, HSBC Holdings and Morgan Stanley as lead arrangers for the sale.
Aircraft purchase plans
Meanwhile, having experienced a challenging first few months this year, Emirates also needs to raise funds for 193 aircraft — worth some $66 billion — it has on order from Boeing and Airbus. The carrier intends to have a total of 235 aircraft by 2017.
“In light of profits recorded this year, Emirates is continuously growing its business and raising funds to meet its fleet expansion plans. The airline will invest a multi-billion dollar amount over the next three years to increase its fleet size with a majority of wide body aircraft,” an Aerospace Defence Analyst at Frost Sullivan, told Gulf News.
According to the prospectus, Emirates expects the deliveries of passenger aircraft in the next few years to be restricted to wide-body Airbus A380-800s and Boeing 777-300ERs. It also expects deliveries of Airbus A350 aircraft to commence in April 2015 on the basis of delivery schedules agreed with the manufacturer. “These aircraft types are expected to form Emirates’ core fleet in the next decade,” the carrier said in the prospectus.
According to the prospectus, Emirates has raised a total of $24 billion over the 14-year period to January 1, 2011 for financing aircraft and corporate finance requirements. It added that Emirates intends to continue using diversified funding sources for its fleet development programme.