Air France-KLM has successfully priced a €500 million issuance of hybrid bonds, offering a fixed annual coupon of 5.75% (yielding 5.875%) until the first reset date. The undated, deeply subordinated hybrid bonds will be rated BB by Fitch and B+ by S&P, qualifying for 50% equity credit from both agencies.
Fitch and S&P have reaffirmed the company's long-term issuer ratings at BBB- and BB+ respectively, both with a Stable outlook. The bond issuance was met with strong investor demand, attracting an orderbook exceeding €1.75 billion—an oversubscription rate of 3.5 times. This outcome highlights investors' robust confidence in Air France-KLM's strategic direction and the resilience of its credit fundamentals.
The estimated net proceeds will be allocated to general corporate purposes, including the potential refinancing of existing subordinated instruments within the group. The transaction supports the company's objectives to streamline its balance sheet, enhance financing efficiency, and preserve financial flexibility. An application will be made for the hybrid bonds to be listed on Euronext Paris. (€1.00 = US$1.12 at time of publication).
