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Recommendation
Outperform
USD400m 8.50% Nov 2019
USD350m 7.875% Oct 2021
AUD150m 8.25% May 2023
Credit Outlook
Stable
Thomas Jacquot
Head of Research
+61 2 9697 8708
thomas.jacquot@fiig.com.au
Key Financials (AUDm)
| FYE (30 Jun) |
16 |
17 |
18F |
| Revenue |
5,021 |
5,047 |
5,336 |
| Adj. EDITBAR |
850 |
894 |
995 |
| Net Interest Expense |
170 |
168 |
155 |
| Adj. Net Debt |
4,761 |
4,400 |
4,437 |
| Net Debt/Adj. EDITBAR |
5.6x |
4.9x |
4.4x |
| Adj. EDITBAR/ Net Interest Expense |
1.6x |
1.5x |
1.8x |
| Passengers (mil) |
23.72 |
24.17 |
24.68 |
Source: FIIG Securities
We initiate our coverage on Virgin Australia's 8.25% notes due 2023 with an Outperform recommendation. At the same time, we reiterate our Outperform recommendation on the company's 8.5% notes due 2019 and 7.875% notes due 2021. Our credit outlook is Stable
Executive Summary
- Inflation linked securities should be in every fixed income portfolio. These securities protect investors against inflationary pressures while maintaining a steadily growing income flow.
- Inflation linked securities should be in every fixed income portfolio. These securities protect investors against inflationary pressures while maintaining a steadily growing income flow.
- Inflation linked securities should be in every fixed income portfolio. These securities protect investors against inflationary pressures while maintaining a steadily growing income flow.
- Inflation linked securities should be in every fixed income portfolio. These securities protect investors against inflationary pressures while maintaining a steadily growing income flow.
| Relative value |
| Issuer |
Des. |
Fixed/FRN |
Size (m) |
Coupon |
Maturity |
Mid-Price |
YTW |
YTW Date |
ZSpread (bp) |
Price |
Next Call Date |
Recom. |
| Virgin Australia |
Unsec. |
Fixed |
USD 400 |
8.50% |
15 Nov 19 |
101.50 |
7.31% |
15 Nov 19 |
460 |
100.00 |
15 Nov 19 |
O/P |
| Virgin Australia |
Unsec. |
Fixed |
USD 350 |
7.875% |
15 Oct 21 |
100.00 |
7.87% |
15 Oct 21 |
499 |
100.00 |
15 Oct 21 |
O/P |
| Virgin Australia |
Unsec. |
Fixed |
AUD 150 |
8.25% |
30 May 23 |
101.85 |
7.79% |
30 May 23 |
548 |
104.13 |
30 May 21 |
O/P |
Source: FIIG Securities, Bloomberg
Note: Indicative prices as of 2 July 2018