Sunday 18 March 2018

Ryanair's O'Leary eyes €1bn in bond issue to fund order for 175 planes

Ryanair boss Michael O’Leary said that the credit rating will allow the company to independently access the bond markets. Bloomberg
Ryanair boss Michael O’Leary said that the credit rating will allow the company to independently access the bond markets. Bloomberg
John Mulligan

John Mulligan

Ryanair is likely to raise between €500m and €1bn in its first-ever bond issue, the airline's boss, Michael O'Leary has told the Irish Independent.

The bond, which would be used to help finance the airline's current order for 175 aircraft, would be a major departure for Ryanair, which has not previously accessed capital markets on its own.

Last week, Ryanair received its first-ever corporate credit rating, from Standard & Poor's. It rated the airline BBB+, making it the highest-rated airline in the world.

Ryanair placed a 175-aircraft order with Boeing last year. It will increase the airline's fleet to more than 400 and enable it to achieve a target of carrying 110 million passengers by 2019, compared to the 81.5 million it carried last year.

"The first delivery of the new aircraft doesn't come until September, which is when we'd want to be accessing public or debt markets," said Mr O'Leary.

He pointed out that Ryanair had close to €3bn in cash on its books and that the carrier "could buy the planes" for cash if it wished.

"There's a whole range of financing (options)," he said.

Asked how much he expected Ryanair to raise via a bond, Mr O'Leary said: "I would think something between €500m and €1bn."

"It's going to happen. If you look at the reputation of Ryanair in the financial community and with the ratings, it would be probably, at the moment, one of the cheaper ways to raise debt."

He said it was "unlikely" that a bond offering by the airline would happen this year.

"It might happen, but we have a five-year aircraft-delivery programme. We will raise a bond at some point over the five years, but we wouldn't be under any pressure to rush out and get a bond. I could buy the first few out of cash ourselves."


In the past, Ryanair has raised funds via bonds backed by the US government-owned ExIm bank, but having its own credit rating enables the airline to directly access the bond market.

"What we haven't done in the past is enter the bond market and getting the ratings will allow us to," said Mr O'Leary.

He said Ryanair needed at least one more rating to be able to independently access debt markets. He expects ratings agencies Fitch and Moody's to have issued their ratings by the summer.

"There's no great urgency on us at the moment," added Mr O'Leary. "We've got the Standard & Poor's rating, which is the highest rating in the world for any airline. We would expect to have another one within the next month or two."

Irish Independent

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