| TORONTO, June 28
TORONTO, June 28 Air Canada said it
would terminate a tender offer to buy back certain bonds due to
the recent volatility in debt and capital markets.
Canada's largest airline said in a statement late on
Thursday that the market volatility had made refinancing terms
Investors pulled $7.97 billion out of U.S.-based bond funds
in the week ended June 19 in the first three-week streak of
outflows since August 2011, according to data released this
Most of the outflows came after U.S. Federal Reserve
Chairman Ben Bernanke's comments last week that the bank might
reduce its $85 billion in monthly bond purchases later this year
if the economy is strong enough. Bernanke also said the Fed
might end the program in mid-2014.
Bernanke's comments triggered a selloff in bond and stock
markets, catapulting U.S. Treasury yields to 22-month highs.
This in turn has raised financing costs for companies,
including Air Canada, seeking to tap debt markets.
Montreal-based Air Canada said it would not accept any of
the notes that have been tendered into its offer. The company
will promptly return or credit all notes previously tendered and
The debt Air Canada had been intending to buy back included
its 9.25 percent senior secured notes due 2015, its 10.125
percent senior secured notes due 2015, and its 12 percent senior
second lien notes due 2016.
"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," Chief Financial
Officer Michael Rousseau said in the company's statement.