The KfW loan was part of a 9 billion-euro rescue package from the German government agreed in June after the pandemic, and associated collapse in passenger numbers, left the company reeling.
Airlines were among the hardest hit sectors last year, with many forced to ground their fleets and Lufthansa was among several that lost highly-prized investment-grade credit ratings.
Read more: Lufthansa, IAG Cut to Junk as S&P Warns of 50% Travel Slump
Raising debt to repay government loans could help Lufthansa avoid fire sales of assets that would fetch a higher price once the aviation market recovers from the coronavirus downturn in travel.
Chief executive Carsten Spohr has said he doesn’t expect a return to pre-crisis flying levels until 2024, feeding speculation the company might need to quickly sell or partially list its Lufthansa Technik maintenance division.
The airline received more than 2.6 billion orders for its two-tranche bond, Bloomberg reported earlier. The 750 million euros of notes with a four year maturity will pay a 3% coupon, while the 850 million euros due in seven years will pay 3.875%.