SAS Scandinavian Airlines (SK, Copenhagen Kastrup) has advised it will not make an interest payment on its CHF200 million Swiss francs (USD214.8 million) perpetual subordinated bonds. The airline, which voluntarily entered into Chapter 11 bankruptcy provisions in July 2022, was due to make the interest payment on January 14, 2023. The currency bonds have CHF127.195 million (USD136.6 million) still outstanding.
The bonds, which pay 0.625% annually, are colloquially known as the Swiss bonds and were issued on January 14, 1986. They began trading on the open market on January 29, 2015, and Citibank now holds a substantial tranche. Entities involved in recent on-market and off-market trades involving the bonds include the Zurich Cantonal Bank, Southey Capital, and Cbonds Estimation.
SAS Scandinavian Airlines launched a transformation plan dubbed SAS Forward in early 2022. In April, the airline elected to postpone interest payments on two perpetual loan period hybrid bonds "in accordance with the terms and conditions” of those bonds. When the carrier applied for bankruptcy protection in mid-2022, it noted that it needed to reduce or convert over SEK20 billion Swedish krona (USD(USD1.91 billion) of debt into common equity. That debt included state hybrid notes, commercial hybrid notes, term loans, aircraft leases liabilities, contractual maintenance obligations, executory contract obligations, and the Swiss bonds.
Like the April interest rate postponement, this decision accords with the terms and conditions of the bonds and SAS Scandinavian advises that the bondholders have been notified.
