Philippine Airlines Prices US$300 Million Inaugural Bond Offering

Philippine Airlines (PAL) has priced its inaugural US$300 million senior unsecured guaranteed bond, marking the carrier’s first entry into the international bond market as it continues to strengthen its balance sheet following its financial restructuring.

The five-year fixed-rate notes will carry a 7.75% coupon and will be issued through PAL’s wholly owned subsidiary, Primero Agila Limited. The bonds will be guaranteed by Philippine Airlines, Inc. and Air Philippines Corporation and are expected to settle on July 16, subject to customary closing conditions. The securities will be listed on the Singapore Exchange.

Investor demand significantly exceeded the size of the offering, with orders surpassing US$1.4 billion, resulting in an oversubscription of approximately 4.5 times. The transaction reflects renewed investor confidence in the airline’s financial recovery and long-term growth strategy.

The issuance also establishes several milestones for both the airline and the Philippine capital markets. According to PAL, it is the first rated high-yield bond issued by a Philippine company in more than a decade, the first unsecured rated high-yield bond from an Asian airline, and the first rated airline bond offering from South and Southeast Asia.

Lucio C. Tan III, President of PAL Holdings, Inc., said: “This landmark bond offering is a powerful affirmation of Philippine Airlines’ transformation and the confidence that global investors have in our long-term vision and growth ambitions. This allows us to strengthen our network and continue to elevate the travel experience for our customers. It reinforces Philippine Airlines’ role in promoting tourism, trade, investment and economic growth for the Philippines.”

The successful offering follows a period of operational and financial improvement for the airline, including sustained profitability, fleet modernization, international network expansion and the receipt of credit ratings from Moody’s and Fitch Ratings. As Philippine Airlines marks its 85th anniversary, the bond issuance provides additional funding flexibility to support its next stage of growth.

Deutsche Bank served as Sole Global Coordinator and Rating Advisor, while BNP Paribas acted as Joint Bookrunner for the transaction.