Hong Kong’s airport authority raises US$2.4 billion from historic bond issuance

AAHK’s bond was targeted at institutional investors and denominated in Hong Kong dollars

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A plane soars above Hong Kong International Airport. Photo: Nora Tam

Published: 6:54pm, 8 Jan 2025

The Airport Authority of Hong Kong (AAHK) raised HK$18.5 billion (US$2.4 billion) from the largest-ever institutional bond denominated in Hong Kong dollars, joining a cohort of borrowers who are tapping the market amid slower-than-expected interest rate reductions.

The latest offering had four tranches with three-year, five-year, 10-year and 30-year notes that were respectively priced at 4.05 per cent, 4.10 per cent, 4.25 per cent and 4.50 per cent. The order book reached HK$25.3 billion thanks to demand from Asian investors, including banks, asset managers, insurers, other companies and private banks. The airport authority has a AA+ rating from S&P Global Ratings.

“There is clearly a lot of interest in the market for Hong Kong dollar assets given the sizeable, long-tenor Hong Kong dollar debt we saw successfully priced [starting] last year,” said David Yim, head of capital markets for Greater China and North Asia at Standard Chartered, one of the AAHK’s bond coordinators.

The airport authority also priced 10-year and 30-year offshore yuan bonds. The “dim sum bonds” totalled 3.2 billion yuan (US$436 million) after receiving bids reaching 5.7 billion yuan from investors in Asia, Europe, the Middle East and Africa. In addition, the airport operator was building a book for its US dollar bonds on Wednesday.

Proceeds from the HK$18.5 billion issuance will be used for refinancing and funding capital expenditures, including the airport’s three-runway system, and general corporate purposes.

In October, the Hong Kong Mortgage Corporation issued Hong Kong dollar-denominated notes totalling HK$15 billion. That followed an August transaction conducted by the city’s Urban Renewal Authority that was worth HK$12 billion. Both issues were oversubscribed.