TAP bonds value plummets

The value of bonds sold to institutional investors in December 2019 have taken a nosedive after the government has admitted that the restructuring plan could lead to investors taking a hit.

The bonds, which are due to mature in December 2024, lost value on Wednesday as the government admitted that those who bought the bonds could lose out. In December last year TAP issued bonds with a five-year maturity which brought in €375 million from investors — more than the expected €300 million when the bond sale was announced.
The bond value fell to 68 cents yesterday which compared to the 78 cents the day before in the largest single fall since March.
TAP’s situation has been the target of various comments in recent days including from the former president of Portugal, Ánibal Cavaco Silva who said that the Portuguese State made a fundamental error by wanting to hold onto a 50% share in the airline.
In an interview with Observador, Cavaco Silva said, “Imagine AutoEuropa (a VW car manufacturing plant near Lisbon) competing internationally in the production of vehicles being run by the State?”
“It is one thing for the State to manage collective transport systems like the Metro or manufacturing euro bank notes through the Bank of Portugal, but a company that is competing with other companies in the international market?”
Disagreeing with the minister of the Economy, Siza Vieira, he said there was a lack of analysis on the “cost of opportunity” in injecting funds into the airline and argued that the government ’s big mistake began when it wanted to retain 50% of the company.
“I warned the prime minister when this was done in 2016. The troubles began from then on in what was a political-ideological game when the State had just 36% and then wanted 50% of TAP,” he said.