Air Berlin Insolvency Sends Etihad Partner Bond Yields Soaring
- Etihad stopped funding German airline after dropping Alitalia
- Value of bonds is lower than price suggests: CreditSights
Visitor queue to access an Airbus A380-800 aircraft, operated by Etihad Airways, on the second day of the 14th Dubai Air Show at Dubai World Central (DWC) in Dubai, United Arab Emirates, on Monday, Nov. 9, 2015. The Dubai Air Show is the biggest aerospace event in the Middle East, Asia and Africa and runs Nov. 8 - 12.
Photographer: Jasper Juinen/BloombergInvestors are dumping debt sold by EA Partners, a special purpose vehicle that holds the equity stakes of Etihad Airways PJSC and its partner airlines, after Air Berlin Plc filed for insolvency in the latest sign that the Gulf carrier’s partnership strategy is being unwound.
Yields on EA Partners bonds due in 2020 jumped to a record 11.7 percent following an announcement from Air Berlin Tuesday that it would file for insolvency after Etihad pulled the plug on additional financing. The price on the debt slumped to 89 cents from 96 cents a week ago, reflecting lower expected recoveries.