Dublin Airport to refinance €550 million debt
Move comes as hub plans new runway to cope with increased traffic
More than 25 million passengers passed through Dublin Airport in 2015 and it is set to break that record this year as customers such as Ryanair and Aer Lingus add new routes and boost capacity.
State-owned Dublin Airport Authority (DAA) is refinancing €550 million in debt as it prepares to begin building its planned new runway.
DAA said recently that it was considering refinancing part of its debt in advance of embarking on the €320 million runway project.
On Monday its subsidiary, DAA Finance Plc, asked holders of a €600 million bond due for repayment in 2018 to offer to sell it back any or all of the debt that they hold.
It plans to issue new bonds to pay for the buy back and will begin meeting investors this week to see if there is an appetite for a new bond.
The company will only go ahead with the repurchase if its succeeds in tempting investors to and issues a new bond.
Analysts recently suggested that the capital markets are likely to be keen to loan the DAA money.
International credit ratings agency Standard & Poors, which gauges businesses’ ability to repay their debts, recently gave DAA an “A” rating.
This means that S&P believes there is only a minimal risk that the DAA will be unable to repay its debts, which should allow the company to borrow at low interest rates.
In a statment to the market, DAA Finance said that the rationale for the offer was “optimise the company’s balance sheet structure”.
Finance director Ray Gray indicated that the State company would refinance existing debt in or two tranches to repay the 2018 debt and to fund the new runway.
DAA, responsible for Dublin and Cork airports, plans on building a second runway in the capital’s gateway to cater for growing demand there.
The runway will cost €320 million and is due to be ready by 2020. Airlines support the project but have challenged the cost, which was originally set at €243 million in 2014.