Azul Linhas Aéreas Brasileiras (AD, São Paulo Viracopos) is planning to issue up to USD500 million worth of five-year to seven-year senior unsecured bonds to raise funds to pay debts it had put off during the Covid-19 pandemic. The amount was revised down from USD600 million to between USD300 million and USD500 million on June 8.
“Azul is raising capital to pay short-term debts and deferrals negotiated with suppliers and partners in 2020,” it told the market intelligence firm LatinFinance in an email, adding that it would invest the proceeds in the relaunch and expansion of the company as a whole and its business units.
If it goes ahead, Azul would become the first carrier in Central and South America to sell senior unsecured bonds since the pandemic began. The proposed five-year bonds would also be the first triple-C-rated new issue from the region since the start of the outbreak, according to GlobalCapital.
The rating agency Moody’s assigned a Caa1 rating to the proposed notes, which will be issued by Azul Investments LLP and unconditionally guaranteed by Azul Linhas Aéreas Brasileiras and its parent company Azul S.A.
Proceeds from the issuance will be used for general corporate purposes, including strengthening liquidity and prepaying operational and financial liabilities that have been deferred during the pandemic. Azul’s total debt may increase, but liquidity will improve, the airline said.
