This article first appeared on GuruFocus .
Aviation borrowers are pushing deeper into global debt markets as Athens International Airport SA and TAP Air Portugal add to what has already become a record start to the year for aviation-sector debt issuance. The industry is still trying to navigate the impact of the Middle East war, but the market backdrop may be improving as oil prices drop and travel stocks recover.
Athens airport is making its debut in the euro bond market with a seven-year benchmark deal, with initial price discussion around 135 basis points over mid-swaps. TAP Air Portugal is also moving ahead with a 300 million five-year junk-rated bond. Portugal is separately in the process of selling a 49.9% stake in TAP, with 5% expected to go to employees and the remaining stake potentially going to either Air France-KLM or Deutsche Lufthansa ( DLAKY ), though final approval may not come for another year.
Airlines and airport operators have raised more than $10.5 billion in debt year-to-date, the strongest first-half pace since 2021, when companies were borrowing to stay afloat during pandemic lockdowns and travel restrictions. Many current deals appear tied to refinancing debt raised during that period, with more than $22 billion, or 64% of debt sold in 2020 and 2021, carrying maturities of five to seven years. Airlines have also been supported by a possible US-Iran peace deal, lower oil prices, and easing jet fuel supply concerns as US and European refiners produce record amounts of the fuel, according to the International Energy Agency.
