UDGET airline Wizz Air today tapped up the bond markets for e500 million (£450m), taking advantage of low borrowing costs to bolster its balance sheet.
Wizz brags of being the greenest of Europe’s airlines due to having the youngest, least CO2 emitting planes. It flies from Gatwick and some regional airports and employs 250 people at Luton Airport in “normal” times.
This was its first bond offer, a deal led by bankers at Barclays, BNP Paribas, Citigroup and JP Morgan.
Chief executive József Váradi said: “The proceeds will further strengthen Wizz Air’s already excellent liquidity position providing continued flexibility to respond to growth opportunities, as well as providing additional financial resilience.”
The shares today were up 61p at 4237p, which leaves the business valued at £3.6 billion.
The stock has doubled since March, a sign of its regard in the City.
Wizz Air joins the list of companies issuing debt this year while interest rates remain low. The three-year bonds sold at 1.35% and were heavily over subscribed – a sign of how desperate investors are for any debt that pays interest of more than zero.
Ryanair, the biggest budget airline, raised e850 million last September at 3%.
Wizz Air’s debt is rated BBB- by Fitch, a sign that it is regarded as riskier than larger corporates or major governments.
Some big companies have been able to borrow at zero interest rates lately. Energy giant Eon raised e600 million at 0.1% this week.
There is ongoing speculation that the Bank of England might send base rates below zero as it fights to keep the economy growing.