Background
The company’s latest US$500mn bond is the second issuance from EA Partners within a year, bringing the total amount raised since September 2015 to US$1.2bn, when the company issued its debut US$500mn bond.
The deal helped diversify the company’s investor base.
Transaction breakdown
The bond featured self-enforcing credit enhancement features and additional deposits which provided further credit support.
Furthermore, the funding platform for the bond allowed for flexibility within the obligor group, which facilitated the transaction’s issuance.
The issuance also ensured there was continued liquidity within the secondary market.
Through physical roadshows in the Middle East supplemented by conference calls with international real money investors, the transaction gained strong interest.
“We credit Etihad Airways’ management on the time it spent speaking with investors across the globe, which meant we were able to execute two very successful transactions over the course of 6 months,” said Nader Al Salim, Executive Director at Goldman Sachs, one of the joint lead managers on the deal.
The success of the first deal meant that the JLMs received a significant number of reverse enquiries from several accounts, which were anchored the second transaction.
The bond’s pricing was primarily based on the company’s 2020 notes, which were trading at around 6.40% pre-announcement. With the curve adjusted, final pricing came in at a minimal concession to the 2020 bond, and on 24 May EA Partners priced a US$500mn 5-year bond at 6.750%.
The geographical spread of investors saw demand largely based in the MENA region and Asia, where 83% of orders were placed. Roughly 10% of the investor base was located in Europe (non-UK), and 7% were based in the UK.
Banks and private banks made up the majority of the investor type, constituting 68%. Fund managers made up 28% whilst 4% of the investor base was composed of sovereign wealth funds and pension funds.
The proceeds of the bond will be used for capex purposes, the purchase of new aircraft, and for the refinancing of existing debt.
