LONDON, Feb 8 (IFR) - Ryanair capitalised on favourable
rates to raise €750m in the bond market on Wednesday after CEO
Michael O'Leary announced profit losses and a challenged outlook
ahead of Brexit.
Ryanair returned to the bond market for the first time in
nearly two years, just days after announcing a 8% drop in its Q3
profits, which it attributed to the sharp decline in sterling
following Britain's vote to leave the EU.
"We expect sterling to remain volatile for some time and we
may see a slowdown in economic growth in both the UK and Europe
as we move closer to Brexit," Ryanair's CEO Michael O'Leary said
on an investor call on Monday.
The airline started marketing a euro benchmark 6.5-year deal
at initial price thoughts of 105-110bp over mid-swaps, before
guidance was later set at plus 95bp area.
Final levels were announced at plus 92bp for an expected
1.25% coupon, on orders of around €3bn.
At this level, market participants saw a 6bp new issue
premium for the paper.
"Ryanair have a very smart bunch of people, and they liked
the look of the market and wanted the best price," a lead on the
O'Leary said last month that Ryanair may tap bond markets
again if rates remain low.
The airline was last in the market in March 2015, printing a
1.125% €850m eight-year bond at mid-swaps plus 67bp.
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The airline is expected to use some of today's proceeds to
fund its €550m share buyback programme which is expected to
finish by the end of February, according to its investor
presentation released on Monday.
" will allow them to announce a new buyback programme
with the full year results and this bond effectively pre-funds
it," one investor said. "I think O'Leary wants to make sure the
ECB is still hoovering up bonds to make sure he gets the best
The European Central Bank corporate sector purchase
programme started on June 8 last year, allowing borrowers to
fund at all-time low borrowing costs. It plans to reduce bond
purchases of the wider quantitative programme by €20bn from
April this year to €60bn a month until at least the end of the
"A lot of CEOs must be thinking I'll get some of that free
money from Mario while there is still some in the till," the
investor added. "He may change his mind soon if inflation in the
euro area continues to pick up, despite what he said earlier
Wednesday's trade, rated BBB+ by S&P and BBB+ by Fitch, will
price later today via BNP Paribas (B&D), Citigroup and Credit
(Reporting By Laura Benitez)