Stock Futures Rise Ahead of Earnings, Jobless Data | Sidnaz Blog

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U.S. stock futures ticked higher ahead of a flurry of earnings reports and jobless figures that are expected to reach a fresh pandemic low.

S&P 500 futures gained 0.2% and Dow Jones Industrial Average futures strengthened 0.2%. Changes in futures don’t necessarily predict moves after the opening bell.

European stocks climbed Thursday for a three-day winning streak. The Stoxx Europe 600 added 0.5% in morning trade. Energy and utilities sectors led gains while consumer staples and healthcare sectors lost ground.

Unilever

slipped 3.4% as it posted its fourth consecutive session of declines.

The U.K.’s FTSE 100 rose 0.1%. Other stock indexes in Europe also mostly climbed as France’s CAC 40 gained 0.5%, the U.K.’s FTSE 250 added 0.6% and Germany’s DAX rose 0.7%.

The Swiss franc and the British pound were up 0.1% and 0.3% respectively against the U.S. dollar and the euro was flat against the U.S. dollar, with 1 euro buying $1.18.

In commodities, international benchmark Brent crude fell 0.1% to $72.16 a barrel. Gold was flat, at $1,802.60 a troy ounce.

German 10-year bund yields were down to minus 0.399% and 10-year U.K. government debt known as gilts yields were down to 0.592%. The yield on 10-year U.S. Treasury fell to 1.270% from 1.279%. Yields move in the opposite direction from prices.

Indexes in Asia gained as Hong Kong’s Hang Seng climbed 1.6% and China’s benchmark Shanghai Composite rose 0.3%.

Traders gathered for the IPO of VTEX at the New York Stock Exchange on Wednesday.



Photo:

brendan mcdermid/Reuters

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Space Race, Nasdaq, IBM, Nvidia: What to Watch When the Stock | Sidnaz Blog

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To the moon! Well, not quite, but into space at least today for

Jeff Bezos,

the billionaire baron of ecommerce. Also not going to the moon is

Amazon


AMZN -0.67%

stock, though it is 0.4% up premarket on Tuesday morning.

  • One reason for Mr. Bezos’s rocket ride is the more earthly goal of winning government contracts for the kind of less thrilling scientific projects the provide reliable revenue. His Blue Origin company is playing catch-up with Elon Musk’s SpaceX.
  • Mr. Musk’s electric vehicle maker

    Tesla,


    TSLA 0.31%

    is getting a bit of a boost Tuesday morning ahead of the open, rising 1% premarket. It is also gaining more attention on the message boards among day traders, according to Topstonks.com. The company reports earnings next Monday and tends to see its stock rise in the days ahead as investors start hoping for exciting announcements.

  • In the wider markets, U.S. stock futures are trending higher ahead of the open following Monday’s broad selloff. S&P 500 futures are up 0.5%, while Dow futures are up 0.6%. Nasdaq-100 futures are up 0.4%
  • Nasdaq the company, not the index, is itself rising premarket, up 1%, after The Wall Street Journal’s exclusive that it will spin out its Private Market for shares in start-ups that trade among some investors before an initial public offering. The business will go into a standalone joint venture company and get investment from three Wall Street banks and SVB Financial Group, a tech specialist bank.
  • Nvidia


    NVDA 15.18%

    is up 0.8% on large volumes following a 15% rise Monday. The shares are up nearly 80% over the past year, putting the chip maker into the top 10 list of U.S. public companies. It also executed its four-for-one stock split overnight, which has given some investors more ways to trade the stock-performance.

  • International Business Machines


    IBM -0.71%

    is up 3.4% ahead of the open on Tuesday after turning in decent second-quarter numbers Monday after the close. The computing group’s efforts to refocus on cloud-based computing and spin off its old-fashioned IT services business is winning fans among investors. At the same time, it has benefitted from companies beginning to invest again as the economy reopens.

IBM reported earnings on Monday..



Photo:

sergio perez/Reuters

Chart of the Day
  • Stocks, commodities and other financial markets took a stumble Monday on growing concerns about the strength of the post-Covid-19 global recovery.

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Latest News Today – Indian Airlines Risk Consolidation, Plane Repossessions

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Airlines Risk Consolidation, Plane Repossessions Amid Covid-19 Surge

India’s airlines are under renewed pressure to raise cash or face the risk of having to downsize, consolidate or have their planes repossessed by lessors as a surge of COVID-19 infections roils travel.

Passenger traffic fell nearly 30 per cent in April from a month before and has halved again so far in May, forcing even the country’s biggest and most cashed-up carrier, IndiGo, to gear up for the storm.

IndiGo’s parent, Interglobe Aviation, will meet on Friday to consider an equity raising, just months after it abandoned plans to raise up to Rs 4,000 crore ($543 million) in January due to a speedy recovery in travel.

With traffic plummeting, according to aviation ministry data, IndiGo’s cash burn is expected to rise to $3.4 million a day – a level last seen in September – from $2 million a day at the end of 2020, said an analyst who tracks the company.

This means IndiGo, which has more than a 50 per cent share of the market, may look to raise $543 million to $679 million amounting to at least two quarters of cash burn, said the analyst, who declined to be named as he was not authorised to speak publicly.

While IndiGo is seen as a survivor, the situation is far worse for a suite of smaller carriers, particularly those without large backers, some of which were already struggling before the coronavirus hit, say analysts.

“India hasn’t provided much government assistance or support so the private airlines will need to turn to the private sector,” said independent aviation analyst Brendan Sobie.

The cash call comes as carriers are expected to report total losses of $4-$4.5 billion in the fiscal year that ended on March 31 and will lose a similar amount this year, aviation consultancy CAPA India said in a note this week.

With more people losing loved ones and the outlook on the economy, jobs and incomes turning down, a recovery in domestic travel, which had been expected by the end of 2021, may not come until at least the first quarter of 2022, analysts estimate.

To make matters worse, several countries including the United States and Britain with whom India has had bilateral arrangements to operate charter flights have restricted arrivals due to high infection rates.

The charters offered a lucrative revenue stream for local carriers after the government shut down regular international flights when the pandemic hit. A recovery in international traffic to pre-COVID levels is expected only by 2024, according to CAPA.

Lessors Less Forgiving

Smaller carriers like SpiceJet Ltd and privately owned GoAir could come under pressure to reduce capacity, find partners or consolidate, analysts say, particularly as aircraft lessors take a harder line.

CAPA expects 250-300 planes to be grounded in the first half of the current fiscal year, while lessors may not be as patient as last year in allowing delayed repayments now air travel is resuming in places such as the United States and China.

“There is now more demand for aircraft, and they would rather have the asset back than let airlines use it for free and depreciate it,” said Sanjiv Kapoor, former chief commercial officer of Indian airline Vistara.

Debt forgiveness is also unlikely.

“Lessors are united in not writing off airline debts and that won’t change, as some are also under severe threat of bankruptcy,” said Shukor Yusof, head of aviation consultancy Endau Analytics.

GoAir plans to raise up to Rs 2,500 crore through an initial public offering, local media reported in March, though as the COVID-19 situation worsens the attraction for investors becomes less clear.

While IndiGo, which took delivery of 44 new planes from Airbus last year, has not delayed lease payments, SpiceJet had missed payments even before COVID-19 hit, according to leasing industry sources, and its financial accounts state it has delayed payments during the crisis.

GoAir and SpiceJet did not immediately respond to a request for comment.

Any carriers that have planes repossessed will struggle once the market picks up. While CAPA says consolidation is inevitable, potentially leading to a 2-3 airline system, other analysts say it is still too early to predict an outcome.

“This hopefully will be a temporary setback for all airlines. We will have to see if all the players will be able to weather the storm,” said Sobie.

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AMC, Ocugen, Carnival, Delta: What to Watch When the Stock Market | Sidnaz Blog

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Here’s what we’re watching ahead of Monday’s opening bell.

What’s Coming Up
  • Earnings are due from

    Tesla


    TSLA 1.35%

    and and

    Brown & Brown


    BRO 1.02%

    after the close.

  • The Dallas Fed’s manufacturing survey, due at 10:30 a.m., is expected to rise to 31.7 in April from 28.9 a month earlier.
Market Movers to Watch

A person received a dose of the Johnson & Johnson Covid-19 vaccine during a visit of U.S. Vice President Kamala Harris to a vaccination center in Chinatown in Chicago, April 6, 2021.



Photo:

carlos barria/Reuters

Market Facts
  • Bitcoin prices on Friday ended the week down 18.3%. It was the largest weekly decline since the week ended March 13, 2020, when it fell 40.6%. Monday morning prices were up again, by 11%.
  • The Dow Jones Transportation Average is up for the past 12 consecutive weeks. It is its longest weekly winning streak since the 15 weeks ended Jan. 28, 1899.
  • On this day in 1973, the Chicago Board Options Exchange opened for trading, with call options available on 16 U.S. common stocks. For the first time, stock options were listed on a dedicated exchange and registered for trading in standardized form.
Chart of the Day

The wild market ride has lifted everything from lumber to stocks to bitcoin—and rarely have so many assets been up this much at once. The frenzy has extended far beyond conventional markets tracked by Wall Street firms.

Must Reads Since You Went to Bed

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IBM, United Airlines, Tesla: What to Watch When the Stock Market | Sidnaz Blog

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Here’s what we’re watching ahead of Tuesday’s opening bell.

  • Stock futures slipped, a day after faltering tech stocks dragged major indexes lower
  • Futures on the S&P 500 and the Dow Jones Industrial Average fell 0.4% apiece. Tech-heavy Nasdaq-100 futures slipped 0.3%.
  • 10-year Treasury yields are higher at 1.625%, from 1.599% on Monday. The dollar slipped again. Crude-oil prices are rising ahead of stockpile data from the American Petroleum Institute. Read our full market wrap here.
What’s Coming Up
Market Movers to Watch

The Johnson & Johnson campus in Irvine, Calif., Aug. 26, 2019.



Photo:

Mario Tama/Getty Images

Market Facts
  • By the end of Friday, S&P 500 companies that had already reported quarterly earnings had beaten profit expectations by a combined 30%, according to FactSet, compared with a five-year average of 7%.
  • Through Thursday, healthcare stocks have returned about 7% so far this year. That lags behind the S&P 500 by about 5 percentage points.
  • On this day in 1720, declaring that he “can calculate the motions of the heavenly bodies, but not the madness of the people,” Isaac Newton sold his 7,000 pounds’ worth of South Sea Co. stock at a 100% profit. But the excitement around England’s first great IPO proved too much even for him, and he soon got back in. Newton ended up losing 20,000 pounds when the bubble burst, and from that moment on, he could “never bear to hear the South Sea referred to for the rest of his life.”
Chart of the Day

European carbon credits are as close as investors can come to a sure thing. Ironically, the chief thing that might trip them up is too much excitement too soon, writes Heard on the Street columnist Rochelle Toplensky.

Must Reads Since You Went to Bed

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Peloton, Coca-Cola, Tesla: What to Watch When the Stock Market | Sidnaz Blog

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Here’s what we’re watching before Monday’s opening bell.

  • U.S. stock futures wobbled, suggesting major indexes will pause after notching records at the end of last week.
  • Futures tied to the S&P 500 fell 0.3%. Contracts linked to the Dow Jones Industrial Average slipped 0.2% and Nasdaq-100 futures slipped 0.3%. Read our full market wrap.
What’s Coming Up
Market Movers to Watch
  • Coca-Cola


    KO 0.66%

    shares inched up 0.7% after it reported earnings for its latest quarter before the open.

  • Peloton Interactive


    PTON -3.08%

    shares dropped 6.8% ahead of the bell. A federal safety agency over the weekend told people with young children or pets to stop using the company’s treadmills. The move by the Consumer Product Safety Commission comes after its investigation into the death of a child involving one of the machines turned up dozens of instances of injuries. Peloton called the report “inaccurate and misleading.”

  • U.S.-traded shares of China-based

    AnPac Bio-Medical Science


    ANPC -10.71%

    shot 21% higher premarket. The company pointed to strong demand for its paid tests based on cancer differentiation analysis technology in the first quarter, “setting a record high Q1 test volume.”

  • Shares of

    Clean Energy Fuels


    CLNE 0.18%

    jumped 11% premarket. The company said it signed an agreement with

    Amazon


    AMZN 0.60%

    to provide low and negative carbon renewable natural gas.

  • XBiotech


    XBIT -2.21%

    shares rose 6.6% premarket. The biopharmaceutical company on Monday said it received FDA approval to begin a Phase I/II clinical trial of its new drug candidate, XB2001, in patients with pancreatic cancer.

  • Tesla


    TSLA 0.13%

    shares slipped 1.7% premarket. Two men died after a Tesla vehicle that authorities believe was operating without anyone in the driver’s seat crashed into a tree Saturday night north of Houston.

Shoppers walked past the Tesla Inc. showroom at the Chamtime Plaza in Shanghai, China, March 8, 2021.



Photo:

Qilai Shen/Bloomberg News

Market Facts
  • Money has poured into two iShares ETFs that track the S&P Global Clean Energy index. Combined with the gains for the stocks they hold, the funds quintupled in value over roughly five months to $14.2 billion at their January peak, before falling back to about $10 billion.
  • As investors weigh the prospects of a return to normal, share prices of denim maker Levi Strauss have soared about 45% year to date, while the stock of legging juggernaut Lululemon Athletica has deflated by 6.9%.
  • On this day in 1933, the day after President Franklin D. Roosevelt devalued the U.S. dollar, the stock market soared, with the Dow Jones Industrial Average leaping 5.66 points, or a near-record 9%, to close at 68.31.
Chart of the Day

A huge run-up in foreign holdings of Chinese government bonds has stalled, with international investors hitting pause on their purchases as China’s interest-rate advantage over the U.S. has shrunk. 

Must Reads Since You Went to Bed

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American Airlines Joins Debt-Market Behemoths | Sidnaz Blog

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American Airlines Group Inc.


AAL -0.93%

raised $10 billion of debt last week to repay government loans and keep its business running as the economy recovers. The deal also boosted the company’s debt by about 20%, transferring much of that risk onto debt investors.

American has survived the pandemic by taking on $22 billion of new debt, bringing its total obligations to $50 billion. Borrowing saved the company—and others like Carnival Corp. and AMC Entertainment Holdings Inc.—from bankruptcy, but it comes with higher interest costs that could affect profitability for years to come.

The deal has freed American of its obligations to the U.S. taxpayer and positioned the company to benefit from a potential economic boom the likes of which Wall Street hasn’t seen in decades. Economists have boosted forecasts for economic growth this year to about 6% in response to the $1.9 trillion Covid-19 relief package Congress passed this month. American’s shares have risen 55% this year as domestic travel bookings picked up.

“For the first time since the crisis hit…we at American are not looking to go raise any money,” American’s chief executive,

Doug Parker,

said Monday at a conference hosted by JPMorgan Chase & Co. Even after accounting for roughly $30 million of cash burned each day, American expects to have $17 billion of liquidity at the end of March and no major debt coming due until 2023.

Mr. Parker called the $6.5 billion of bonds and $3.5 billion of loans American issued on March 10 “the largest transaction in the history of commercial aviation.” If the transactions are completed on March 24, as expected, American would have enough debt to rank as the second-largest borrower in a widely followed index of corporate loans, up from 16th in January 2020, according to data from S&P Global Market Intelligence.

CEO Doug Parker called American Airlines’ March 10 deal ‘the largest transaction in the history of commercial aviation.’



Photo:

alex edelman/pool/Shutterstock

“You’ve done a fantastic job raising liquidity,” JPMorgan analyst

Mark Streeter,

told Mr. Parker at the conference. “The one thing that hasn’t changed, though, is you still have this massive debt burden.” Investors still ask Mr. Streeter, “‘Isn’t some sort of an American restructuring inevitable?’,” he said.

American already had more debt than competitors such as Delta Air Lines Inc. and United Airlines Holdings Inc. before the pandemic because it had borrowed for share repurchases and to modernize its fleet—part of a then-record surge in corporate-bond sales. The coronavirus briefly disrupted debt markets before intervention by the Federal Reserve and the advent of vaccines stoked appetite from investors who are earning minimal yields on government bonds, boosting corporate-debt issuance to new highs.

The new financing, which is backed by American’s frequent-flier program, offered a blended yield of about 5.66% and attracted about $45 billion of orders from investors, people familiar with the matter said. Comparable Delta Air Lines bonds traded at a yield of around 3% at the time, according to data from MarketAxess.

Sound Point Capital Management bought into American loans in recent months because they offer attractive yields given the company’s improving outlook and the dwindling risk of bankruptcy, said

Rick Richert,

head of the firm’s U.S. loan-investing unit. Still, Sound Point is buying only loans backed by valuable assets, like the frequent-flier program and American’s South American routes, which will hold their value better in a downturn, he said.

Others are lending to American indirectly in private markets. Oaktree Capital Management LP has committed to invest $350 million this year in aircraft-leasing company Azorra Aviation Holdings and their first deal is a $60 million financing of regional jets for American, people familiar with the matter said. Returns on private-equity investments in aircraft leasing range from 12% to 15%, they said.

The new deal increases American’s debt load by 20%.



Photo:

Michael Laughlin/Sun Sentinel/Zuma Press

Some investors worry that even when the pandemic recedes, the business travel that makes up a large portion of American’s business might not fully recover.

“One of the key questions coming out of all this is, If you’re a travel-related business, will you ever be worth what you were pre-Covid or will you be worth, say, 70% of pre-Covid levels?” said

Art Penn,

founder of corporate credit fund manager PennantPark Investment Advisers.

SHARE YOUR THOUGHTS

When was the last time you were in a plane? Do you have any plans to return to flying? Join the conversation below.

American’s balance sheet is a concern because the airline industry is prone to booms and busts—most large U.S. carriers filed for bankruptcy over the past two decades—and the bigger the debt burden is, the less cushion there is to weather lean times. The new debt deal will boost American’s annual interest expense by $500 million to $600 million, said Mr. Parker, the CEO.

That will be offset by $1.3 billion of cost savings the company achieved over the past year through management cuts and labor changes, and American plans to start paying down debt once it starts generating cash again. The timing depends on when the company sees itself emerging from the pandemic and entering a sustained recovery, Chief Financial Officer

Derek Kerr

said at the conference.

Airports in Paris and Singapore as well as airlines including United and JetBlue are experimenting with apps that verify travelers are Covid-free before boarding. WSJ visits an airport in Rome to see how a digital health passport works. Photo credit: AOKpass

Write to Matt Wirz at [email protected]

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Air India To Be Unaffected As Boeing Asks Airlines To | Sidnaz Blog

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Air India To Be Unaffected As Boeing Asks Airlines To Ground 777s

Boeing 777-300 planes were inducted into Air Indias fleet in 2018.

Boeing Co urged airlines to suspend the use of 777 jets with the same type of engine that shed debris over Denver at the weekend after US regulators announced extra inspections and Japan suspended their use while considering further action.

The moves involving Pratt & Whitney PW4000 engines came after a United Airlines 777’s right engine failed on Saturday, scattering its protective outer casing over a residential area.

United said the next day it would voluntarily and temporarily remove its 24 active planes, hours before Boeing’s announcement.

Boeing said 69 of the 777 planes with PW4000 engines were in service and 59 were stored, at a time when airlines have grounded planes due to a plunge in demand associated with the Covid-19 pandemic.

Air India is the only carrier which has Boeing 777s in its fleet. But none of such planes have P&W 4000-112 engines. Thus there would be no impact on the airlines.

Jet Airways had a Boeing 777 fleet, which has been grounded since its closure.

The manufacturer recommended airlines suspend operating them until US regulators identified the appropriate inspection protocol.

It falls short of a mandatory global grounding but is another headache for the plane maker after its 737 MAX crisis and comes after criticism of US Federal Aviation Administration (FAA) oversight regarding the 737 MAX.

The 777-200s and 777-300s affected are older and less fuel efficient than newer models and are currently being flown by just five airlines — United, Japan Airlines (JAL), ANA Holdings Inc, Asiana Airlines Inc and Korean Air Lines Co Ltd. Most of them are phasing them out of their fleets.

The problem concerns Pratt & Whitney, one of three engine makers originally involved in the 777, whose engines power less than 10 per cent of the delivered fleet of more than 1,600 planes.

The National Transportation Safety Board (NTSB) said its initial examination of the 26-year-old plane indicated most of the damage was confined to the right engine, with only minor damage to the airplane.

It said the inlet and casing separated from the engine and two fan blades were fractured, while the other fan blades exhibited damage.

Pratt & Whitney, owned by Raytheon Technologies Corp, said it was coordinating with operators and regulators to support a revised inspection interval for the engines.

Newsbeep

Japan’s transport ministry ordered JAL and ANA Holdings to suspend their use while it considered whether to take additional measures, acting before the FAA.

An official at South Korea’s transport ministry said it was waiting for formal action by the FAA before giving a directive to its airlines. The US agency said it would soon issue an emergency airworthiness directive.

“Based on the initial information, we concluded that the inspection interval should be stepped up for the hollow fan blades that are unique to this model of engine, used solely on Boeing 777 airplanes,” the FAA said.

Japan’s transport ministry said that on December 4, 2020, a JAL flight from Naha Airport to Tokyo returned to Naha due to a malfunction in the left engine.

Its Transport Safety Board said on December 28 that it had found two of the left engine’s fan blades were damaged, one from a crack due to metal fatigue. The investigation is ongoing.

Japan said ANA operated 19 of the type and JAL operated 13, though the airlines said their use had been reduced during the pandemic. JAL said its fleet was due for retirement by March 2022.

Korean Air, which has 16 of the planes, 10 of them stored, said it will follow the relevant authorities’ directives on any measures.

The Dutch Safety Board said on Monday it was investigating what had caused a Boeing 747-400 to lose parts of a different type of PW4000 engine shortly after taking off from Maastricht airport on Saturday.

The European Union Aviation Safety Agency meanwhile said it was requesting information on the cause to determine what action was needed.

In February 2018, a 777 of the same age operated by United suffered an engine failure when a cowling fell off about 30 minutes before the plane landed safely. The NTSB determined that incident was the result of a full-length fan blade fracture.

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Singapore Airlines Readies First US Dollar Bond: Term | Sidnaz Blog

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Singapore Airlines Sets First US Dollar Bond: Term Sheet

Singapore Airlines has in the past carried out debt deals in Singaporean dollars rather than US dollars.

Hong Kong, Singapore:  A term sheet for Singapore Airlines’ first US dollar bond has been circulated by bookrunners for the potential issue, and calls were being held with prospective investors on Monday, according to the document seen by Reuters.

The size of the deal will be determined on Tuesday following the briefings with investors in Asia and Europe, two sources with direct knowledge of the matter said.

The term sheet showed the airline had appointed Citigroup as sole global coordinator, along with BofA Securities and HSBC as joint bookrunners for the issue.

Currently, Singapore Airlines Group has more than 20 subsidiaries, including many airline-related subsidiaries. SIA Engineering Company is tasked with handling maintenance, repair, and overhaul (MRO) business across nine countries, with a portfolio of 27 joint ventures, including with Boeing and Rolls-Royce.

Singapore Airlines has in the past carried out debt deals in Singaporean dollars rather than US dollars.

The deal will not be offered to investors based in the US, according to the term sheet.

“We can confirm that SIA did not have any USD issuance in the past,” the airline said in an email response to Reuters.

SIA, which counts Singapore state investor Temasek Holdings as its biggest stake holder, has issued $2.77 billion in five bond issuances in the past seven years, according to Dealogic.

Newsbeep

The most recent was a $372 million 10-year private placement deal in November.

The airline said in a statement Monday it expected its passenger levels by the end of March to be about 25 per cent of its pre-Covid levels and it would fly to nearly 45 per cent of its pre-crisis destinations.

“In line with Singapore’s progressive reopening, as well as the gradual vaccination of the population across the world, we expect to see a measured expansion of the passenger network,” it said.

There was $22.7 billion worth of US dollar debt issued last week in Asia, the busiest week in a year, Refinitiv data showed.

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