An American budget airline announced a $3.15 billion debt funding plan, including a bond sale and convertible debt issuance, while downgrades to junk status were issued by major rating agencies.
JetBlue Airways (NASDAQ:JBLU) saw its stock descend 17%, to $5.00, after it launched a $3.15 billion debt funding.
The America budget airline told investors it is designed to bolster liquidity, whilst it manages its corporate finances amid ongoing challenges.
It is to be cornerstoned through a $2.75 billion bond sale, secured against JetBlue's loyalty program, TrueBlue.
A further $400 million is expected to come through the sale of convertible debt securities, which can be exchanged for new company equity in the future.
This is the latest refinancing in the sector, following similar initiative by the likes of Delta and United, which have also used loyalty programs as collateral to raise funds.
It has, meanwhile, earned the airline a downgrade by credit ratings firms S&P and Moody’s which moved the airlines further down the ‘junk’ tiers – S&P moved to ‘B-‘ from ‘B’ whilst Moody’s moved to ‘B3’ from ‘B2’.
