airBaltic's €340m High Yield Bond, making it the largest ever Latvian corporate bond


STJ Advisors is delighted to announce that Air Baltic Corporation AS (“airBaltic” or the “Company”), Latvia’s national flag carrier, completed on 7th May 2024 a €340m high yield bond issuance to refinance its €200m outstanding bonds maturing on 30th July 2024.


Transaction highlights:

  • High yield bond offering of €340m (making it the largest ever Latvian corporate bond) in order to refinance the Company’s €200m outstanding bonds maturing on 30th July 2024 and fund its growth plans ahead of a potential IPO.
  • Following parliamentary approval, the Government of Latvia committed to invest up to €136m ahead of launch showing the strategic importance of airBaltic for the country.
  • After an extended wall-crossing exercise of over 40 large institutional investors, the Company conducted a broad marketing exercise with a 1-week roadshow dedicated to international and Baltic investors through a mix of 1x1 and group meetings.
  • Books were covered within an hour, with demand ultimately exceeding €800m, with over 100 orders in the book from over 20 countries, coming from a mix of regional and international investors.
  • Majority of orders were significantly scaled back with a large number zeroed and owing to the strong demand, the Latvian Government’s allocation was scaled back to €50m.


Key STJ value-add:

  • STJ Advisors (together with its local partner Superia) was originally appointed as advisor for the Company’s proposed IPO. After airBaltic’s previous attempt at a high yield bond offering in October 2023 did not complete, STJ was retained to assess refinancing options which culminated in the successful refinancing.
  • Establishment of a multi-track process to evaluate various financing options: Given the challenging but “mission critical” nature of the required refinancing, STJ structured and simultaneously ran public bond and private debt tracks and other structured alternatives to ensure the optimal nature of the refinancing and to increase the chances of success. A comprehensive RfP process was designed to assist the Company in the appointment of all parties on both tracks. This involved motivating different banks to pursue their recommended alternatives.
  • Coordination of multi-track syndicate: The multi-track refinancing process was mirrored by syndicate structures which encouraged separate syndicates to both fully explore each structure and come together as one syndicate when the decision to pursue one track was made. 
  • Transaction structuring: STJ worked with the syndicate to devise the optimal transaction structure to drive local demand with the inclusion of a collateral package to address investor concerns raised during the previous attempt.
  • Transaction management and execution: Given the very tight impending maturity deadline of the existing bonds in July, STJ put in place a detailed project timeline and framework ensuring exhaustive exploration of different structures and smooth and timely completion of the transaction.
  • Advice on government involvement: STJ worked directly with airBaltic and its European Commission (“EC”) consultant to explore the Government of Latvia’s investment in the transaction pari passu with other investors in compliance with EC regulations. STJ assisted the company in presenting the refinancing plan to the Cabinet of the Latvian government culminating in the required vote by Parliament to approve the investment.

Independent advice on key decisions throughout the process: STJ provided independent views on all key stages of the transaction, including but not limited to the crucial decision to pursue the high-yield bond issuance with Government support and ultimate transaction management: selection of the track to pursue, launch of wall-crossing, go / no-go decision, pricing and allocations. The bonds priced at par and settled the following day at 103.5 bid.

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