armchairceonr1 wrote:

Bongodog1964 wrote:

7.25% ?

That figure shows the markets have very little confidence in DY.

Bond yields for safe investments are presently around 3% or lower.

Yes, they have to pay huge premium. Investment grade unsecured bonds yield 3-4%, and they have to pay double. And this is not only about bonds, it reflects in all their financing. Customers are their best lender right now.

7,25% is the cupon, not the yield. Dont mix that up.
Looking at Norwegians 7,5% cupon bond of USD 75 Mio, maturing 2025, the yield today is around 6%.
Worth to notice is that Norwegians bond rating is B1 according to Moodys, which is classified as "Junk Bond".

Asiaflyer wrote:

7,25% is the cupon, not the yield. Dont mix that up.

Yes, thats why I wrote before: This is existing bond and coupon is 7,25%. They not told what was yield in this issue.

Asiaflyer wrote:

Looking at Norwegians 7,5% cupon bond of USD 75 Mio, maturing 2025, the yield today is around 6%.
Worth to notice is that Norwegians bond rating is B1 according to Moodys, which is classified as "Junk Bond".

I think this is secured bond where aircrafts are as collateral.

armchairceonr1 wrote:

Bongodog1964 wrote:

7.25% ?

That figure shows the markets have very little confidence in DY.

Bond yields for safe investments are presently around 3% or lower.

Yes, they have to pay huge premium. Investment grade unsecured bonds yield 3-4%, and they have to pay double. And this is not only about bonds, it reflects in all their financing. Customers are their best lender right now.

Compared to many other airlines, it is not too bad. Could have been better, yes. But these prices don't exactly signal the company is in any trouble

And btw: Norwegian is now benefiting from a weaking USD vs NOK

Someone83 wrote:

Compared to many other airlines, it is not too bad. Could have been better, yes. But these prices don't exactly signal the company is in any trouble

And btw: Norwegian is now benefiting from a weaking USD vs NOK

Compared to many other airlines it is bad. Finnair pay 2,25% for unsecured bond. And this is indeed signal that they struggle to find finance at reasonable price. https://www.aerotime.aero/en/aviation-f ... -200m-bond

Someone83 wrote:

And btw: Norwegian is now benefiting from a weaking USD vs NOK

Yes, but same time they takes double hit from oil, jet fuel cost now over 640$/t.

Many people thinks that Norwegian can get cash by selling assets, but that is not the case. Practicularly all their assets is collateral to their existing debts. If they sell those assets, first they have to pay back debt.

For example their bank shares are collateral to their credit facility and their hangar is collateral to their secured bond. Aircrafts are collateral to their aircraft financing etc. Last year they made sell&lease back deal of 11 old aircraft, and they had to pay back loan of those aircrafts + they booked big one time loss. I assume that they got hardly any cash of that deal.

This year their estimated capex is about 2200m$ or 17000mNOK. They really should find long term solution to finance their investments. I think they should try to get new equity, then maybe they could get other finance for reasonable price. Now they just kick can on the road and pay very high price of the money.

Asiaflyer wrote:

armchairceonr1 wrote:

Bongodog1964 wrote:

7.25% ?

That figure shows the markets have very little confidence in DY.

Bond yields for safe investments are presently around 3% or lower.

Yes, they have to pay huge premium. Investment grade unsecured bonds yield 3-4%, and they have to pay double. And this is not only about bonds, it reflects in all their financing. Customers are their best lender right now.

7,25% is the cupon, not the yield. Dont mix that up.
Looking at Norwegians 7,5% cupon bond of USD 75 Mio, maturing 2025, the yield today is around 6%.
Worth to notice is that Norwegians bond rating is B1 according to Moodys, which is classified as "Junk Bond".

My mistake, however a yield of 6% still reflects how the markets view their finances especially with the B1 rating

armchairceonr1 wrote:

Someone83 wrote:

Compared to many other airlines, it is not too bad. Could have been better, yes. But these prices don't exactly signal the company is in any trouble

And btw: Norwegian is now benefiting from a weaking USD vs NOK

Compared to many other airlines it is bad. Finnair pay 2,25% for unsecured bond. And this is indeed signal that they struggle to find finance at reasonable price. https://www.aerotime.aero/en/aviation-f ... -200m-bond

Someone83 wrote:

And btw: Norwegian is now benefiting from a weaking USD vs NOK

Yes, but same time they takes double hit from oil, jet fuel cost now over 640$/t.

US fracking production will explode this year, don't be a long play in oil. We make field equipment, orders are piling up. The US will likely pass the Saudis and Russians within two years as world's top producer. They will soon capitulate on their production quotas to maintain marketshare or it will be replaced with US exports. The worm has nearly turned.

The only thing saving the support structure for oil right now is the crap storm in Venezuela and it's murder of their oil industry along with the country in general. Gotta love Marxist socialism.

Bongodog1964 wrote:

My mistake, however a yield of 6% still reflects how the markets view their finances especially with the B1 rating

Norwegian bonds have quite poor liquidity but for example this bond take big hit last autumn and its yield is now 7,11%, coupon 5% and last trade 93,00. I think that investors are not very happy now, it was issued last February.. http://markets.businessinsider.com/bond ... 0010783459

This is not only about Norwegian, but jet fuel price has taken up very fast during past months. In the end of december Norwegian had fuel hedges only for 481.500 tons, which represent about 3 months fuel consumption. Norwegian last cost guidance assume that jet fuel price is 575$ and last weeks price was 674$.