British Airways parent to issue bonds secured by airport slots
LONDON (Reuters) - The parent of British Airways said on Monday it would issue its first secured bond, backed by its take-off and landing slots at Heathrow airport, as well as BA's routes between London City Airport and JFK in New York.
International Airlines Group (ICAG.L) hopes to raise 250 million pounds, but final terms and timing of the deal will be based on investor feedback and market conditions.
The deal is the first secured financing transaction backed by airport slots to which Moody's has assigned a rating. The rating agency said in a statement that it gave the bond A3 grade and put a value of about 454 million pounds on up to 31 paired take-off and landing slots, assuming that 250 million pounds of bonds are issued.
Other assets backing the bond are two leased A319 narrow-body aircraft.
The bond is being issued by a newly created subsidiary of British Airways, called British Airways Limited, IAG said in its statement.
U.S. airlines have used their airport gates as debt collateral for some time. But it is a novel practice in Europe, where airport access is allocated by time slots alone, rather than physical infrastructure.
(Reporting by Stephen Mangan; Editing by Dan Grebler)
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