Hong Kong's airport authority raises US$4b in bond deal

[HONG KONG] Hong Kong's airport authority has raised US$4 billion to fund its 3rd runway development in a 4-tranche US dollar debt deal, according to a term sheet seen by Reuters, as the city grapples with growing flight bans and cancellations.

It raised US$1 billion in a 5-year green bond tranche, US$1.2 billion in the 10-year, US$1.2 billion in the 30-year and US$600 million in the 40-year issue, the term sheet showed.

Airport Authority Hong Kong did not immediately respond to a request for comment from Reuters.

Final prices were set at US Treasuries plus 42.5 basis points for the 5-year tranche, 80 basis points for the 10-year, 120 basis points for the 30-year and 140 basis points for the 40-year paper, according to the term sheet.

The prices were between 30 and 37.5 basis points tighter than initial indications when the deal launched in Asia on Wednesday (Jan 5).

Raising the funds was significantly more expensive for the airport now compared to when it raised US$1.5 billion in 10- and 30-year debt in January last year at 65 and 80 basis points above the Treasury benchmarks.

Order books were open on Wednesday when Hong Kong announced new 2-week flight bans for 8 countries, including the US, the UK and Australia as part of ongoing border restrictions.

Hong Kong recorded 38 new coronavirus cases on Wednesday, with all but one of those cases captured in the hotel quarantine testing regime.

REUTERS