IAG's British Airways launches bond issue

26th Jun 2013 07:12

British Airways has launched an inaugural 927m dollar publicly-traded bond issue, using aircraft as collateral.The airline's parent company International Consolidated Airlines Group (IAG), said the bond issue would allow the company to diversify its sources of funding. The bonds, known as Enhanced Equipment Trust Certificates (ETTCs), are a form of aircraft financing commonly used by US airlines. The transaction includes Class A and Class B certificates with an underlying collateral pool made up of six new B787-8 aircraft, two new B777-300 ER aircraft and six new A320-200 aircraft, due for delivery between June 2013 and June 2014.The Class A certificates, worth $721.6m, have an annual coupon, payable quarterly, of 4.625%, while the Class B certificates, worth $205.4m, have an annual coupon, payable quarterly, of 5.625%.Enrique Dupuy, CFO of IAG said: "This transaction marks a strategic milestone as we diversify our sources of funding. It is also the first time that British Airways has used EETCs and that this form of financing has been used in the UK."RD