One of Europe’s busiest airports is hitting the bond market on Monday to shore up its finances in the face of a second tourist season lost to the coronavirus pandemic.
London’s Gatwick Airport is marketing 400 million pounds ($553 million) of junk-rated debt with a five-year maturity. But with British holiday makers still forbidden from traveling, it’s offering a hefty premium to lure skeptical investors — a yield between 4.75% and 5% which is more than double the average for European bonds with a similar credit rating.
Representatives for Gatwick didn’t immediately respond to a request for comment on the offering
Air travel has been one of the hardest-hit sectors of the coronavirus pandemic and 2020 saw multiple bailouts of beleaguered carriers. And with much of Europe in the grip of a third wave of infections, the industry’s troubles are not over yet.
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Gatwick’s passenger numbers will this year only rebound to around 40% of 2019 levels, Standard & Poor’s Global Ratings said in a note on Monday.
But while there’s little prospect of respite for the travel industry, Gatwick is selling into a booming junk bond market. High-yield debt sales are running at the fastest pace on record this year as investors scour for returns in a world of rock-bottom interest rates.