Swire Pacific To Buy Back Cathay Convertible Bonds, Sell 363 Million Shares

Swire Pacific (00019) said on September 2, 2026 that it will buy back HK$4.7 billion of Cathay Pacific convertible bonds and sell about 363 million Cathay shares through an accelerated transaction, equivalent to about 6% of Cathay's issued share capital. The move would allow bondholders to convert the bonds into Cathay Pacific shares. After the transaction, Swire Pacific's stake in Cathay Pacific will fall to 39.2%, according to ETNet. UBS estimated the deal could reduce Swire Pacific's 2026 dividend income by about HK$340 million, or 5.6% of its expected dividend payout, and said the transaction is likely aimed at reducing fair-value loss risk from Cathay Pacific's rising share price. UBS said the deal should be broadly neutral for Swire Pacific's cash flow and balance sheet, as the cash raised from selling Cathay shares will be used to repay the bond buyback cost. The bank kept a Neutral rating on Swire Pacific and a target price of HK$95, and said its 2027 forecast dividend yield is 4.6%, slightly above the industry average of 4.5%.