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easyJet PLC.
Investment evaluation
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easyJet plc
easyJet plc is the UK's second largest low-cost airline.
The company has issued bonds that were trading at EUR 103,000 all the time before the coronavirus at a nominal price of EUR 100,000 and a coupon of 1.75% (interest rates in the EZ are -0.5% and the ECB has expanded its bond buying program from the market).
Complete information
Issuer
EasyJet Plc
The name of the issue
EasyJet, 1.75% 9Feb2023
Currency
euro €
Emission volume
500,000,000 EUR
The face value of the bond
1000 EUR
Indicative market price
810 EUR
Discount
190 EUR
Coupon from face value
1.75% p.a
Coupon payout frequency
Due date
Semi-annual pay
9/2/2023
100% liquidity
Yes
Minimum volume
100,000 EUR
Yield to Maturity
9.20% pa - before taking into account all costs
Preferred scenario
13.10% pa - before accounting for all costs
Rating
BBB
Hierarchy of debt
Senior uninsured
You can find the prospectus for the bonds here:
1.75% Senior Notes due 2023 - Prospectus
Economy
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The company was able to raise its own financing by cutting costs and delaying deliveries of some new aircraft. It thus has enough cash until December 31, 2020, and after that the company would be able to obtain financing, for example, by selling part of the fleet.
The company's total long-term debt is £1.75 billion.
Below you can find the individual distribution of maturities.
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easyJet's assets are £8.16bn.
Cash £1.576bn.
Aircraft £4.57bn - discount 25% - £3.42bn.
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Bond summary
Total debt is £1.75bn against cash of £1.576bn and the aircraft are discounted 25% to book value of £3.42bn. We will receive a secured bond with a yield of 9.2% due in less than three years.
This corresponds to a BBB bond rating. So the investment band of the highest quality bonds. Therefore, we expect the bond to level off very quickly to the corresponding level that we see around the nominal value of EUR 1000, against the current price of EUR 800 (+25%), and that over the next 12 months.