THE owner of travel website Booking.com is selling debt to fund a stock buyback after its shares plunged last week on the back of disappointing earnings.
Booking Holdings plans to raise 2.75 billion euros (S$4 billion) from a euro-denominated bond sale. Proceeds will partly to repurchasing shares, according to a person familiar with the matter, who asked not to be identified because they’re not authorised to speak about it.
Corporate bond issuance has smashed records this year so far, but the proportion of issuers selling bonds to fund share buybacks has been relatively small at US$5.3 billion, according to data compiled by Bloomberg. But with companies meeting an insatiable investor appetite for new debt, there’s been more room for aggressive deal structures.
Booking shares dropped 10 per cent on Friday (Feb 23), the worst decline since the early days of the pandemic, as the war in Israel weighed on travel reservations and currency fluctuations cut into earnings.
“The travel sector is starting to normalise and depleting consumer wallets is starting to slow down the growth trajectory,” said Alexandre Fade, a portfolio manager at Fisch Asset Management who owns Booking bonds. He declined to comment on individual holdings.
There’s been other signs that the travel is starting to slow as households look for ways to save money. Expedia Group gave a downbeat forecast this month and Airbnb said last week that overall demand was starting to moderate coming out of the pandemic. BLOOMBERG
