Airport Authority sells record HK$18.5 billion of bonds for government projects

The Airport Authority of Hong Kong sold HK$18.5 billion of bonds in the largest-ever issuance in the financial hub’s local currency, amid a sluggish recovery in the aviation sector and delays to the airport’s expansion plan. 

The Hong Kong government’s statutory body priced 3-year, 5-year, 10-year and 30-year notes yielding 4.05 percent, 4.1 percent, 4.25 percent and 4.5 percent, respectively, late Tuesday. The notes received HK$25.3 billion of bids, all from Asia, according to a person familiar with the matter.

The Hong Kong dollar issuance is largest of its kind, surpassing the HK$18 billion convertible-bond offering by now-liquidated developer China Evergrande (3333) in 2018, according to Bloomberg-compiled data. 

Proceeds of the bond will be used for refinancing and funding capital expenditures, including the airport’s three-runway project and general corporate purposes, according to the person. 

While Hong Kong airport’s three-runway system came into operation at the end of November, there will be little additional flight capacity available for at least another year. 

The city’s flagship airline, Cathay Pacific Airways (0293), isn’t yet back to full strength and the airport is struggling to appeal to major foreign airlines. A broader airport upgrade that cost the government US$18 billion (HK$140 billion), meanwhile, has been delayed until at least the end of 2025. 

HKAA also has priced 10-year and 30-year dim sum notes totaling 3.2 billion yuan (HK$3.39 billion). It started marketing dollar notes of 3.5, 5.5 and 10-year Wednesday morning.

(Bloomberg)