Hong Kong airport Raise Over $500 million in First Local-Currency Bond Offering

The Airport Authority Hong Kong (AAHK) has announced that it has successfully priced a $512 million senior notes offering (the Notes) in Regulation S format under its $8 billion Medium Term Note Programme to fund capital improvements including the construction of third runway.

This is the first time AAHK taps into the Hong Kong Dollar public institutional bond market. The Notes were well-received by 57 investors including sovereign wealth funds, asset managers, corporations, banks (53%) and insurance companies (30%), with order book over $1.41 billion, representing an oversubscription rate of 2.75 times.

The coupon for the bond was set at 3.83 per cent, compared with the initial price guidance given to potential investors of 4.2 per cent, AAHK said in a statement.

AAHK successfully raised the amount of financing it targeted and will use the net proceeds from the issue of the Notes to fund its capital expenditure including capital expenditure of the Three-runway System (3RS) Project and for general corporate purposes, which will enable AAHK to enhance airport infrastructure and improve passenger experience.

AAHK is dedicated to delivering a world-class airport experience and contributing to the growth of the regional and global aviation industry. The Authority also believes the issuance can further foster the development of Hong Kong’s local bond markets.

Overwhelming Response

AAHK Chairman Jack So said that they were pleased with the overwhelming responses from investors. The issuance diversified AAHK’s funding sources at capital market with the most competitive financing costs.

The Notes are expected to be issued on 9 January 2024, subject to the satisfaction of certain conditions precedent and are expected to be listed on The Stock Exchange of Hong Kong Limited.

The Joint Global Coordinators, Joint Bookrunners and the Joint Lead Managers include Bank of China, Citigroup, HSBC, Standard Chartered Bank, UBS; and the Joint Bookrunners and Joint Lead Managers are ANZ, BNP PARIBAS, Crédit Agricole CIB, DBS Bank Ltd., Mizuho.

According to South China Morning Post, AAHK is a frequent issuer of US dollar bonds, raising billion last year and billion in 2022. Last year’s sale was eight times oversubscribed, receiving billion in orders as travel resumed between Hong Kong and mainland China after three years of COVID-19 pandemic curbs.

The transaction comes amid a strong recovery in passenger traffic in Hong Kong, seen as one of the world’s most important financial and transport hubs.

Traffic recovered to 80% of the pre-pandemic level and is expected to reach pre-pandemic levels by the end of this year, AAHK said in a statement on December 27. Hong Kong International Airport saw a new post-pandemic record of 164,000 passengers on December 23 during the Christmas holiday travel peak.