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Bond Market News
Garuda Enters Court-Led Debt Restructuring
December 10, 2021
Troubled Indonesian carrier Garuda, which has been experiencing annual net losses since 2017 due to high costs, aggressive fleet expansion and corruption, and later due to the global pandemic, is entering a court-led debt restructuring process. Judges in the Central Jakarta Commercial Court have accepted a petition to suspend debt payments to Garuda’s creditors, potentially reducing Garuda’s liabilities from $9.8bn to $3.7bn and allowing the carrier to renegotiate leasing terms or return planes to aircraft lessors with the smallest penalties possible. Earlier this year, Garuda narrowly avoided defaulting on its $500mn sukuk after its sukukholders approved of a maturity extension by three years. As Indonesia’s key carrier between 69 destinations within the country, and with 60.5% of Garuda’s equity is held by Indonesia’s government, Garuda’s future is considered to be one of national importance.
Garuda’s 5.95% 2023s were stable, trading 0.31 points higher at 26.375.
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