Etihad-linked bonds drop again after Air Berlin bankruptcy

Air Berlin recently filed for bankruptcy protection. (Reuters)
Updated 17 August 2017
0

Etihad-linked bonds drop again after Air Berlin bankruptcy

DUBAI: Etihad Airways’ bonds issued through a special purpose vehicle have dropped more than five points in the secondary market a day after Air Berlin, in which Etihad has a large minority stake, filed for bankruptcy protection.
In April, the “EA Partners” bonds dropped by almost 10 cents on the dollar after workers at the Italian carrier Alitalia — in which Etihad has a 49 percent stake — rejected the company’s latest turnaround plan, blocking it from accessing rescue financing.
An “internal debt assumption” agreement between Etihad and Alitalia — revealed through a Fitch note in the days following Alitalia entering special administration, but had been signed earlier — put a floor under the bonds, and they subsequently bounced back almost to par value.
But it is unclear if a similar agreement is in place for Air Berlin, and some of EA Partners’ creditors fear that after years of losses supporting the German carrier, Etihad might not cover the carrier’s portion of debt in the SPV bonds.
Etihad and Air Berlin declined to comment.
“Air Berlin adds to what has been a steady stream of bad news — whether related to Alitalia or Etihad itself,” said a Dubai-based portfolio manager, speaking on condition of anonymity because of commercial sensitivities.
Etihad is undertaking a strategic review which began last year and saw it offload its minority stake in a regional European carrier in July before announcing on Tuesday it was no longer willing to prop up Air Berlin.
“The added problems don’t necessarily mean help isn’t still on the way for the bond, but it does it make it more complicated. The bond’s credit enhancement has limits, and so does the appetite for bailouts,” the portfolio manager said.
Yields on the notes — a $700 million bond maturing in 2020 and a $500 million bond maturing in 2021 — jumped by more than 2 percentage points after Air Berlin’s bankruptcy announcement. The 2021 had a bid yield of 11.5 percent on Wednesday, up from 9.1 percent before the announcement. The 2020 notes were quoted at 12.3 percent on Wednesday, from 9.4 percent on Monday.
The EAP bonds include Etihad and several other airlines partially-owned by the Abu Dhabi carrier. The bond proceeds were used to enter into separate debt obligations with the entities involved, which included Etihad Airways, Etihad Airport Services, Alitalia, Air Berlin, and other airlines such as Air Serbia and Air Seychelles.
Air Berlin recently led for bankruptcy protection.


Saudi minister Al-Falih says Aramco IPO likely in 2019

Updated 25 May 2018
0

Saudi minister Al-Falih says Aramco IPO likely in 2019

  • Energy Minister Khalid Al-Falih: “We are ready, the company (Saudi Aramco) essentially has ticked all the boxes. We’re simply waiting for a market readiness for the IPO.”
  • Khalid Al-Falih: “Most likely it will be in 2019 but we will not know until the announcement has been made. All I could say is stay tuned.”

RIYADH: Saudi Arabia is most likely to hold the initial public offering (IPO) of oil giant Aramco in 2019, Energy Minister Khalid Al-Falih said on Friday, confirming a delay from the initial plan to list the company this year.

“The timing I think will depend on the readiness of the market, rather than the readiness of the company or the readiness of Saudi Arabia,” Khalid Al-Falih, who’s also the company’s chairman, said at the St. Petersburg International Economic Forum in Russia on Friday.

“We are ready, the company essentially has ticked all the boxes,” he said. “We’re simply waiting for a market readiness for the IPO.”

For almost two years, Saudi officials said the IPO was “on track, on time” for the second half of 2018. But for the first time in March they suggested it could be delayed until 2019.

“Most likely it will be in 2019 but we will not know until the announcement has been made,” Al-Falih said. “All I could say is stay tuned.”

The Aramco IPO would be a once-in-a-generation event for financial markets. Saudi officials said they hope to raise a record $100 billion by selling a 5 percent stake, valuing the company at more than $2 trillion and dwarfing the $25 billion raised by Chinese retailer Alibaba Group Holding Ltd. in 2014.