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Cathay Pacific mulls HK $6.74 bn debt sale

The bonds are issued for five years and have an initial conversion price of HK $8.57 a share with a 30 percent premium

Cathay Pacific plans to issue convertible bonds worth $ 870 million in the wake of the impacts caused by the pandemic. The development is expected to weather the impacts and support the airline’s long-term operations

It is reported that the bonds are issued for five years and have an initial conversion price of HK $8.57 a share with a 30 percent premium. The coupon rate of the bonds will be tagged 2.75 percent.

Furthermore, the company has also indicated that it could reduce passenger capacity by about 60 percent, while cargo capacity would record a 25 percent slump and cash burn will surge if Hong Kong’s government follows new Covid-19 rules and regulations. The airline crew members will have to undergo 14 days of mandatory quarantine upon their home return.

The expected imposition of fresh rules would ramp up cash burn between HK $ 300 million and HK $ 400 million.  The airlines have made 5,900 jobs redundant due to the pandemic situation and have also shut its Cathay Dragon unit in 2020.

The new Covid-19 rules are also expected to slash a quarter of the airlines’ profitable cargo capacity and reduce flight capacity by two thirds.

Cathay Pacific has raised funds worth HK $ 39 billion last year against the pandemic and received government support worth HK $ 27.3 billion.

The pandemic has walloped the majority of global passenger airlines. The global air travel scenario is expected to remain volatile unless the Covid-19 is drastically reduced or completely eradicated.

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