IAG raises a further €1.2 billion via a junk bond issue
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IAG, the Spanish-based parent company of British Airways, announced a new fund raising on Thursday.
During the day, the company raised a further €1.2 billion via a bond sale. The money will be repaid in two tranches:
- €500 million to be repaid in March 2025
- €700 million to be repaid in March 2029
For clarity, the bonds are only for sale to institutional investors and not to the general public.
The four year bonds were issued with a coupon of 2.75% (down from a proposed 3.25% at the start of the day). The eight year bonds were eventually priced at 3.75%, down from a proposed 4.25%.
Despite the cut in the coupon, it is still above the European average for junk-rated corporate debt of 2.59%. The bonds are rated B1, which is a ‘junk’ rating.
For a quick comparison, the typical five year fixed rate UK savings account is currently paying 1% to 1.25%. There would be considerable demand – albeit with considerable risk compared to a savings account – if similar £-denominated bonds were offered to UK private investors.
As we covered, British Airways saw its debt drop into ‘junk’ territory last year.
The stated purpose of the fund raising is to “include but not be limited to”:
- strengthening the Group’s balance sheet and increasing the Group’s overall liquidity position
- helping the Group withstand a more prolonged downturn in air travel
- providing the Group with the operational and strategic flexibility to take advantage of a recovery in demand for air travel
The official announcement is on the IAG website here.
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As a reminder, there are various ways of earning Avios points from UK credit cards. Many cards also have generous sign-up bonuses!
In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards with a bonus of up to 25,000 Avios. You can apply here.
You qualify for the bonus on these cards even if you have a British Airways American Express card:
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There are two official British Airways American Express cards with attractive sign-up bonuses:
British Airways American Express Premium Plus
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British Airways American Express
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You can also get generous sign-up bonuses by applying for American Express cards which earn Membership Rewards points.
American Express Preferred Rewards Gold
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The Platinum Card from American Express
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Run your own business?
We recommend Capital On Tap for limited companies. You earn 1 Avios per £1 which is impressive for a Visa card, along with a sign-up bonus worth 10,500 Avios.
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You should also consider the British Airways Accelerating Business credit card. This is open to sole traders as well as limited companies and has a 30,000 Avios sign-up bonus.
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There are also generous bonuses on the two American Express Business cards, with the points converting at 1:1 into Avios. These cards are open to sole traders as well as limited companies.
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Click here to read our detailed summary of all UK credit cards which earn Avios. This includes both personal and small business cards.
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