Hong Kong airport readies bond issuance worth up to $1.5 billion: sources

FILE PHOTO: A woman, wearing a face mask following the coronavirus disease (COVID-19) outbreak, sorts luggage at Hong Kong International Airport in Hong Kong, China October 20, 2020. REUTERS/Lam Yik

HONG KONG (Reuters) - The operator of Hong Kong’s main airport is aiming to raise as much as $1.5 billion via bond issuance to help fund the construction of a third runway, two sources with direct knowledge of the matter said.

Calls with investors started on Wednesday for the Airport Authority Hong Kong deal which consists of 10-year and 30-year U.S. dollar denominated unsecured notes, a term sheet showed.

The sources said the airport operator would likely raise between $1 billion and $1.5 billion, with the final amount finalised this week.

The sources declined to be identified as the information has not yet been made public. Airport Authority Hong Kong did not immediately respond to a request for comment.

The deal is Asia’s third aviation-related debt transaction since the start of 2021 after Singapore Airline raised $500 million and Bank of China Aviation finalised a $400 million issuance.

The airport bonds are expected to be rated AA+ by S&P, the term sheet showed.

The construction of a third runway is expected to be finished in 2022 and should be fully operational by 2024, according to the airport’s website. It said the project should cost HK$141.5 billion ($18.3 billion).

Travel through Hong Kong’s airport has been decimated by the coronavirus pandemic with an 87.7% drop in passenger numbers in 2020, although cargo flights rose 18.3%.

Hong Kong’s government finalised a $2.5 billion green bond issuance on Wednesday, a statement from the city’s monetary authority said.

Reporting by Kane Wu and Scott Murdoch; Editing by Edwina Gibbs