S&P rates Air Baltic notes B+

S&P said it assigned its B+ preliminary issue credit rating to the expected dollar- or euro-denominated proposed senior secured notes to be issued by Air Baltic Corp. AS.

The B issuer credit rating on Air Baltic is on CreditWatch with positive implications, reflecting the possibility of an upgrade – likely by one notch to B+ – if Air Baltic raises sufficient financing to redeem the maturing €200 million senior notes due in July 2024 and bolsters its liquidity position, S&P said.

“We expect Air Baltic to use the net proceeds of the proposed notes to refinance its €200 million outstanding notes and increase its liquidity sources by retaining a significant portion of the notes' proceeds on the balance sheet,” S&P said in a news release.

“A successful issuance would strengthen Air Baltic’s liquidity position via a longer-dated debt-maturity profile and sources of liquidity covering uses by more than 2.0x and allow the airline to pursue growth as air traffic demand firms. That said, the company’s interest costs will increase significantly, given much higher interest rates.”

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