British Airways parent raises €390m to fund Vueling deal

City A.M. Reporter
BRITISH Airways parent firm IAG yesterday raised €390m (£331m) through a convertible bond issue to help to fund the purchase of low-cost carrier Vueling.

Chief executive Willie Walsh said the bond issue would also bolster liquidity and the credit profile of IAG, which also owns loss-making Spanish flag carrier Iberia.

IAG said some of the money raised would also go towards paying off bridge loans from its British arm and Santander.

The bond deal shows how companies are continuing to take advantage of investor demand for convertibles, which offer the chance to profit from a surge in stock markets to multi-year highs without the risk of buying shares outright.

As of 9 May, more than $10bn has been raised from European convertibles this year, according to Thomson Reuters data, up 44 per cent on the same period last year.

The IAG bonds, which mature in 2018 and have a fixed interest rate of 1.75 per cent, can be converted into ordinary shares.

IAG appointed Banco Santander, Barclays, Deutsche Bank’s London branch, Morgan Stanley and UBS as joint bookrunners and joint lead managers for the bond issue.
Shares in IAG closed down 0.15 per cent yesterday.