Lufthansa’s Fate Will Affect Thousands of German Savers Holding Its Debt

(Bloomberg) -- The outcome of a proposed bailout of flag carrier Deutsche Lufthansa AG that’s meeting resistance from its largest shareholder, will impact the savings of thousands of German investors who hold its debt.

The troubled airline has more than 3.7 billion euros ($4.2 billion) in outstanding bonds, loans and Schuldschein debt mostly held by German savings banks, insurers, commercial lenders and investment funds, according to data compiled by Bloomberg.

The company’s 500 million euros of bonds that mature in 2024 have fallen to three-month lows as investors take fright at the company’s battle for survival.

Read More: Lufthansa Braces for Portentous Week With Future on the Line

Schuldschein, a kind of promissory note common in German capital markets, accounts for more than 1.5 billion euros the company’s outstanding debt, a Lufthansa spokesman confirmed in an email. Lufthansa is one of the biggest users of the Schuldschein market, having sold 800 million euros in a single transaction last year and 1.2 billion euros in 2016. The earlier issue was partly paid off in 2017.

Debt Issues

Lufthansa also carried out smaller issues of Schuldschein, such as a 150 million-euro deal in February -- just before the coronavirus pandemic triggered a collapse in air travel. The company planned to arrange a further 200 million-euro issue in early March but put that deal on ice because of volatile capital markets, according to the spokesman.

Schuldschein holders typically sit on their commitments and there are seldom any trades or secondary sales in the private market unless companies run into problems.

Table below shows Lufthansa’s most recent fund-raising in bank market.

Lufthansa’s Most Recent Debt Transactions

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