Investing

Qantas Airways Ltd

Transportation

Qantas Airways Ltd

Latest price

$ 122.76

  • ASX code
    YTMQF3
  • Maturity date
    19-May-2022
  • Capital structure
    Senior Unsecured
  • Coupon type
    FIXED
  • Coupon P.A
    7.75%
  • Issue Date
    19-May-2014
  • Next ex. distribution date
    07-Nov-2017
  • Next interest payment date
    19-Nov-2017
  • Payment frequency
    Semi-Annual

Issuer

Qantas Airways Limited 

Base terms

Information Memorandum dated 17 March 1999

Pricing supplement

Dated 12 May 2014 

Nature of the bonds

Direct, unconditional, unsecured debt obligations of the Issuer which rank equally among themselves and at least equally with the Issuer’s other unsecured debt obligations (except for debt mandatorily preferred by law).

Interest rate

7.75% per annum, payable semi-annually (in two coupons of 3.875%) in arrears on 19 May and 19 November in each year, including the Maturity Date, subject to adjustment upwards by a maximum of 1.5% per annum, should Qantas’ credit ratings fall below certain levels.

Bond denomination

A$10,000 

Issue Size

A$300,000,000

Repayment at par on the maturity date

On the Maturity Date, bondholders are scheduled to receive the Face Value and the final Coupon Payment for the last Interest Period.

Key benefits

 

Key benefits include:

  • interest paid semi-annually in arrears;
  • interest paid as 100% cash;
  • interest is not deferrable nor are interest payments discretionary;
  • rank equally with all other senior and unsecured creditors of the Issuer.

Key risks

The value of an investment in Qantas Bonds may fluctuate due to various factors, including investor perceptions, worldwide economic conditions, interest rates, debt market conditions and factors that may affect Qantas’ financial performance. The following risks may also affect an investment in Qantas Bonds:

  • Credit Risks – Associated with the Issuer and any Guarantors;
  • Liquidity Risk – An active secondary market in respect of the Bonds may never be established or may be illiquid and this would adversely affect the value at which an investor could sell the Bonds;
  • Interest Rate Risk – The value of Fixed Rate Bonds may be adversely affected by movements in market interest rates;
  • Regulatory Risks – The aviation industry in Australia is highly regulated, which can limit Qantas’ flexibility and may adversely affect its financial performance
  • Litigation Risks – Risks relating to litigation and regulatory actions;
  • Default Risk – If an event of default occurs under the Bonds, or Qantas fails to perform any obligation in relation to the Bonds, such event or failure may impact on the value of an investment in the Bonds, the transferability of the Bonds and the ability of a holder to recover amounts due under the Bonds.

Negative pledge

Not Applicable

Early redemption by issuer

Not Applicable

Early redemption by bondholder

Bondholders can require the Issuer to redeem the bonds at par (100%), where there has been a Change of Control (e.g. an entity gains control of the Issuer) and a credit rating downgrade of the Bonds below a certain rating. 

Events of default

Events of Default include:

  • Failure to Pay: Applicable with a 2 Business Day cure period;
  • Breach of other obligations: Applicable, with a 30 day cure period;
  • Insolvency: Applicable;
  • Cross default: Applicable with Threshold Amount of A$ 25,000,000;
  • Enforcement: Applicable with Threshold Amount of A$20,000,000;
  • Unenforceability: Applicable, with a 30 day cure period.
  • The Issuer ceases to carry on business as an airline.

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