Deutsche Bank AG is currently marketing a US$230 million private credit transaction for Malaysian budget airline AirAsia Aviation Group. The deal is structured as an 18-month revenue bond backed by ticket sales from several of AirAsia's routes, based on information from sources familiar with the matter.
This financial arrangement aims to test investor demand amid the current rising fuel prices, which have significantly impacted airline operating costs. Deutsche Bank has underwritten and fully financed the deal, approaching select banks and funds for potential syndication. Both Deutsche Bank and AirAsia have refrained from commenting on the matter.
The rise in oil prices since early March, driven by geopolitical conflicts in the Middle East and the closure of the Strait of Hormuz, has led to a sharp increase in jet fuel costs. This surge has prompted many airlines to reduce services; however, AirAsia's near-term prospects remain optimistic supported by sustained travel demand and strategic cost management, according to a report from Public Investment Bank, as cited by Bernama.
The new deal bears similarities to a US$443 million securitized bond issued by the airline in 2024, backed by revenue from ticket sales. In that issuance, US$200 million was provided by Ares Management Corp and Indies Capital Partners, with aircraft lessors contributing US$243 million.
