MIAMI – Despite financial headwinds for the commercial aviation industry, institutional investors appear interested in airline opportunities.

International Airlines Group (IAG), the holding company for British Airways (BA), Iberia (IB), and others, announced higher-than-expected demand for a new issue of two series of senior unsecured bonds totaling €1.2bn (US$1.43bn) to help the multi-national company raise funds.

In a statement, IAG said the first tranche (Series A bonds), due March 25, 2025, will have a principal amount of €500m (US$595m). The second tranche, Series B bonds, will be due on March 25, 2029, with a principal amount of €700m (US$833m) – an increase of €200m (US$238m) from an original offering announced earlier on Thursday.

IAG holds British Airways, Iberia, Aer Lingus, Vueling and Level as subdidiary airlines. IMAGE: IAG

Bond sale to close March 25

The bonds will bear a fixed rate of interest of 2.75 percent for the Series A bonds and 3.75 percent for the Series B bonds, in both cases payable annually in arrears.

The bond issuance is expected to take place on or about March 25. The bonds are being made available only to institutional investors, not retail brokerages.

Like other international carriers, IAG, the holding company for BA, Aer Lingus (EI), and the Spanish trio of IB, Vueling (VY), and IB’s low-cost arm, Level, saw steep financial losses in 2020. IAG reported an operating loss for the year of €7.4bn (US$8.8bn).

Featured image: Members of IAG. Image: British Airways