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Ryanair Debuts Euro Bonds as Borrowing Costs Fall to Record

June 10 (Bloomberg) -- Ryanair Holdings Plc sold its first bonds after borrowing costs for investment-grade companies fell to a record in Europe.

The region’s biggest discount airline issued 850 million euros ($1.2 billion) of notes due June 2021, according to a statement from the Dublin-based airline. The average yield investors demand to hold comparable securities fell 10 basis points this month to an all-time low of 2.01 percent, according to Bank of America Merrill Lynch index data.

Ryanair raised the debt after getting the highest credit rating for any airline, a BBB+ grade from Standard & Poor’s and Fitch Ratings. Proceeds from the sale will be used to help fund its acquisition of 180 Boeing Co. 737-800 jets.

“We see this as one of a sequence of issuances,” Chief Financial Officer Howard Millar said in a telephone interview. There is “very strong appetite,” for debt of highly-rated airlines, he said.

The company’s bonds priced to yield 85 basis points more than the mid-swap rate, according to data compiled by Bloomberg. That compares with an average spread of 115 basis points for similarly-rated notes maturing in five to seven years, the Bank of America index data show.

“For a first time issuer, you’d think more yield would be left on the table,” said Patrick Bawlf, a credit analyst at Mizuho International Plc in London. “The bond market has a lot of momentum here and it’s a well-known brand that people know and most like their business model.”

Ryanair agreed to buy five more Boeing Co. 737-800s in April, bringing its total order book to 180 jets worth $16 billion. Deliveries of the planes start in September, Millar said.

To contact the reporters on this story: Katie Linsell in Madrid at klinsell@bloomberg.net; Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editors responsible for this story: Shelley Smith at ssmith118@bloomberg.net Tom Freke, Michael Shanahan

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