Economy

Avianca sells COP500 billion in local bonds

by Adriaan Alsema

Colombia news - Avianca

Colombia’s largest airline, Avianca SA, sold 500 billion
Colombian pesos (US$247.5 million) worth of local bonds on Tuesday to finance the
purchase of Airbus jets and to pay debt.

Avianca, which initially expected to sell COP300 billion in bonds, raised the
amount as demand for the securities reached COP692.5 billion.

The proceeds of the bond sale will finance the purchase of four Airbus jets
due to arrive in 2010 and to pay COP132 billion worth of debt with commercial
banks, company Chief Financial Officer Gerardo Grajales recently said.

Avianca sold bonds maturing in five years at inflation plus a spread of 5.50
percentage points.

It also sold seven-year bonds at inflation plus a spread of 6.30 percentage
points and 10-year bonds at inflation plus a spread of 6.69 percentage points.

In 2008, Avianca began the purchase or lease of 34 new Airbus jets, of which
five are A330s and 29 are A319 and A320 jets. The company has ordered 12 new 787
Dreamliner jets from U.S. manufacturer Boeing Co. (BA), but the company recently
said the delivery of the planes is delayed.

The Bogota-based company plans to invest about US$3.5 billion by 2011 in the new
airplanes.

Avianca is replacing its aging fleet with new jets that will allow the company
to save fuel, lower maintenance costs and boost revenues. (Dow Jones)