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Ryanair issues $600m of debt by capitalising on cheap US bonds

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There have been a number of other incidents involving the airline's planes in Spain in recent months, including three emergency landings in Valencia in July when flights which had been diverted from another airport were reported to be low on fuel.

There have been a number of other incidents involving the airline's planes in Spain in recent months, including three emergency landings in Valencia in July when flights which had been diverted from another airport were reported to be low on fuel.

There have been a number of other incidents involving the airline's planes in Spain in recent months, including three emergency landings in Valencia in July when flights which had been diverted from another airport were reported to be low on fuel.

RYANAIR has issued nearly $600m (€466m) of debt by capitalising on low-interest bonds backed by a US government bank to help fund aircraft purchases from Boeing.

The US-based Export-Import Bank (Ex-Im) has long offered to guarantee bank loans to finance overseas buyers' purchases of American-made products and services ranging from bulldozers to engineering work to jetliners.

After credit markets froze, the Washington agency agreed to back bonds issued by airlines to refinance loans.

In May, Ex-Im eased rules so airlines could raise the money for planes directly from the bond market with debt guaranteed by the bank. The notes are called "pre-funded," because airlines can now sell them before taking delivery of their aircraft.

Ryanair has issued $597m of the debt. On September 5, the carrier sold $194.3m of 1.741pc notes due in October 2024.

The carrier is due to receive delivery early next year of the final stage of what was a record aircraft order it made with Boeing a number of years ago. Ryanair currently has no other aircraft on order.

Interest rates at record lows and the relaxation of Ex-Im Bank rules are making it easier for non-US airlines to access capital markets even as private-sector lending becomes more expensive and difficult to obtain.

Boeing, the biggest US exporter has a jet order book backlog valued at $302bn.

"We're using a fraction of the market's capacity for this type of product," said Kostya Zolotusky, managing director of leasing and capital markets for Boeing Capital, the Chicago-based planemaker's finance arm.

Selling the bonds now lets airlines beat a change in international trade rules taking effect in 2013 that will make it costlier to tap financing such as the bonds and loans backed by the Ex-Im Bank, Mr Zolotusky said.

Strife

Fixed-income investors are snapping up the bonds because they yield more than treasuries while still carrying US government backing, Mr Zolotusky added.

"When you're buying a long-lived asset like aircraft and you have the opportunity to lock in a coupon like the last couple of deals at less than 2pc, you'd sleep a lot better knowing you'd locked that in," said Robert Morin, vice president of Ex-Im Bank's transportation division.

Meanwhile, the Dublin Airport Authority edged closer yesterday to industrial strife after Siptu president Jack O'Connor said that he has authorised the serving of action against the body in a long-running dispute over pensions.

Talks with the Labour Relations Commission that have aimed to tackle a pension crisis at a fund used by former and current DAA and Aer Lingus workers have been adjourned. This will allow the LRC time to develop a solution that could be accepted by all sides.

Mr O'Connor said no notice of action is yet intended to be delivered to Aer Lingus because he claimed the airline was engaging more constructively in talks.

The troubled pension scheme under the spotlight has a €700m deficit.

Irish Independent