Even though many borders continue to remain close to air travel, OCBC Credit Research has maintained its bond issuer profile for Singapore Airlines at “neutral (5)”.
OCBC says the national flag carrier is in a “manageable short-term liquidity situation” that is sufficient to cover financial needs till March 2023.
It points out that SIA has built up liquidity buffers through the pandemic, including from shareholders, which serve as a “multiplier effect” for further fundraising.
Notably, SIA’s major shareholder Temasek has provided important undertakings on the airline’s rights issuances in 2020.
Temasek has also provided undertakings on the $6.2 billion additional mandatory convertible bonds.
OCBC says it favours the SIASP 3.50% ‘30s as the bond offers a yield pick-up of about 20 basis points in implied-Singapore dollar terms.
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It also favours the US dollar-denominated SIASP 3.00% ‘26%, which is paying 2.50% in implied-Singapore dollar terms.
OCBC has a “neutral” rating for the SIASP 3.16% ‘23s.
Cover photo: Bloomberg
