Singapore Airlines Limited (SIA) plans to issue new SGD 10y senior unsecured bonds at an initial price guidance of 2.950%, for accredited and institutional investors only. The issuer, SIA, is currently unrated, and this new issue is also expected to be unrated. Proceeds from this issuance will be used for aircraft purchases and aircraft-related payments, as well as general corporate or working capital purposes, including refinancing of existing borrowings.
Financial Highlights:
SIA’s operations remained broadly stable, holding steady even as key metrics eased modestly. Passengers carried by the group rose 8% year-on-year (YoY) in the first half ending 30 September 2025 (1H FY25/26) to 20.8 million. While this represents a deceleration from the 10.8% YoY growth recorded in 1H FY24/25, it reflects a return to more normalised demand conditions. Encouragingly, passenger load factor (how effectively the airline is filling its available seats) remains robust at 87.7% (up from 86.4% in 1H FY24/25). Simply put, a higher passenger load factor means SIA is better able to fill more seats on its flights, underscoring sustained underlying travel demand. However, SIA’s revenue per available seat-km slipped slightly to S9.9c/ask, compared to 1H FY24/25’s 10.2c/ask due to higher competition.
Likewise, cargo operational metrics paint a similar picture of stability amid softer pricing. Volume held up with cargo load rising 1.2% YoY to 3,083.1 million tonne/km due to resilient industry demand. This was partially offset by weaker pricing, as cargo yields softened in the face of intensifying competition.
In 1H FY25/26, SIA recorded stable revenues of S$9.68 billion, representing a 1.9% YoY increase from the previous period’s S$9.50 billion. This was underpinned by steady passenger travel demand, with passenger-related revenue increasing 1.5% YoY to S$7.8 billion, partially offset by softer cargo revenue which fell 2.8% YoY. Singapore’s national carrier recorded a total expenditure of S$8.8 billion, up 2.0% YoY, given the rise in non-fuel costs.
In all, operating profit for the group for the period came in stable at S$803 million as increased passenger and cargo volumes managed to offset softer pricing power and the slight uptick in expenses. Operating cash flow remains resilient at S$1.55 billion.
While SIA’s core operations remain resilient, we note that headline net profit fell 67.9% YoY to S$239 million. This decline was driven almost entirely by massive losses suffered from its 25.1% stake in Air India. That said, the losses are non-cash in nature and did not have material impact on operating cash flow. While we are comfortable with SIA’s standalone performance, we are keeping an eye on the ongoing struggles of its Indian associate, which recently requested additional capital support from its shareholders.
Looking ahead, we think earnings are likely to remain stable as robust demand for air travel and cargo is expected to offset any softness in yields, which we expect to be moderate. Barring exceptional circumstances, SIA’s resilient operating metrics support its ability to service its debt obligations.
Credit Highlights:
Singapore Airlines continues to maintain a decent credit profile, characterised by steady deleveraging and a strong net cash position. During 1HFY25/26, the group successfully reduced total debt by S$2.0 billion (compared to 31 March 2025), improving total debt-to-equity to 0.70x (compared to 0.82x as of 31 March 2025). Net debt to equity deteriorated slightly to 0.15x for 1HFY25/26 compared to 0.09x as of 31 March 2025 but remains within our comfort zone.
As of 30 September 2025, SIA’s cash and fixed deposits amounted to S$8.5 billion, exceeding total borrowings of S$7.8 billion, providing a decent liquidity buffer for the national airline. SIA has S$1.57 billion debt coming due within the next year or less, which is comfortably covered by its cash and fixed deposit balance of S$8.5 billion.
While we are monitoring Air India’s capital support request–which could lead to a cash outflow of roughly S$370 million–we do not believe this will materially impact SIA’s credit standing. The group’s current liquidity and ability to generate cash from operations are more than sufficient for such capital support without compromising its credit profile.
Table 1: Comparing SIA’s other SGD bonds
|
Bond Name |
Issuer |
Years to Maturity |
Ask Price |
Yield to Worst |
|
SIASP 2.950% 30Jan2036 Corp (SGD) |
Singapore Airlines Limited |
10.000 |
100.00* |
2.950%* |
|
Singapore Airlines Limited |
0.824 |
101.191 |
1.663% |
|
|
Singapore Airlines Limited |
1.588 |
102.053 |
1.811% |
|
|
Singapore Airlines Limited |
4.867 |
105.068 |
2.389% |
|
|
* New Issue |
||||
Overall, SIA’s credit profile remains stable in our opinion. Our comparison with other SIA’s SGD bonds takes the 2.950% IPG as reference, though investors should note that the final price guidance (FPG) is likely to come in below the 2.950% IPG level. We list some comparisons to other SIA SGD issues in Table 1 above.
SIASP’s new issue of IPG of 2.950% represents a pickup of around 70+ bps over 10y SORA (2.21% as of 20 January 2026). This 2.950% IPG yield represents slightly higher yield pickup than its existing SGD bonds of shorter tenors (as seen in Table 1 above).
Overall, we think this new issue is slightly better priced, with a spread of roughly 70+bps compared to the rough 40-50+bps spread offered by the other outstanding SGD bonds from SIA, relative to sovereigns of similar tenors. With limited availability of long-dated SGD bonds in the airline sector, it stands out as one of the few options for investors seeking duration. The bond is also well suited to investors favouring a stable issuer and/or those looking to secure yields against a backdrop of declining interest rates.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds a NIL position in the abovementioned securities. The analyst who produced this report holds a NIL position in the abovementioned securities.
