“The Malaysian budget carrier operator is targeting a coupon rate of below 10% for the proposed note,” said the people, who requested anonymity.

“AirAsia is taking advantage of the improved travel numbers to get cheaper refinancing,” they added.

The company received a US$443 million dual-tranche private financing last year to use partly for refurbishing planes grounded during the pandemic, with borrowing costs as high as 11%.

“AirAsia continues to explore various financing initiatives, including potential options in the public bond markets, and will make further announcements in due course should there be any material developments,” deputy CEO Farouk Kamal said in an emailed response to Bloomberg’s request for comment.

The budget carrier’s bond plan comes as the Federal Reserve delivered another interest rate cut yesterday, with yields on the benchmark 10-year US Treasuries now down over 70 basis points from a January high.

The group is also seeking a RM6.8 billion (US$1.6 billion) restructuring to create a new listed entity that will simplify its operations by combining its various airline units.

“AirAsia is holding non-deal investor meetings in Hong Kong on Nov 18, and in Singapore on Nov 21,” Kamal said in the email.

“Our strong earnings performance despite a challenging environment has generated significant investor interest and demand,” he wrote.

Deutsche Bank AG is the sole arranger for the proposed bond, said the people familiar with the matter. The bank declined to comment.

As part of the borrowing facility AirAsia secured last year, private credit funds Ares Management Corp and Indies Capital Partners Pte Ltd provided a US$200 million tranche while aircraft lessors supplied the other US$243 million portion.

The private credit tranche of the securitised deal pays a coupon of 11% per annum and has a four-year tenor.

The lessor piece offers 7% per year and carries a two-year maturity.