Air Canada dismisses debt repurchase plan

By IVCPOST Staff Reporter

Jun 28, 2013 08:53 AM EDT

Air Canada, Canada's foremost airline, announced on Thursday that it would dismiss a tender offer to repurchase some bonds. Today's unstable capital market and debt made refinancing terms repellent which directly accounts for its decision.

According to the information made public this week, $7.97 billion was pulled out of US-based bond resources in June 19. Since August 2011, this is just the initial three-week streak of expenditures.

After Ben Bernanke's, U.S. Federal Reserve Chairman, remark last week that Fed may lessen its $85 billion once-a-month bond purchases, most of the expenses occurred. He even added that the bank may terminate the program in mid-2014 which triggered a sell-off. The said liquidation of bonds and stock markets yielded 22-month highs for the US Treasury.

Air Canada is just one of the companies that seeks to tap the liability market and had a boost in the financing costs due to the comment made by Bernanke.

"The strength of our balance sheet and our business overall, and the fact that the notes do not mature until August 2015 and February 2016, provides us flexibility to take advantage of a more opportune time to refinance the notes," Michael Rousseau, Chief Financial Officer, stated in the company's account

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