Airport Authority Hong Kong (AA) today announced its dual-tranche debt securities offering of US$1.5 billion, split between US$750 million non-call 5.5-year and US$750 million non-call 7.5-year perpetual capital securities.
The transaction marks the Airport Authority’s first foray into the perpetual bond market, which is also the first US dollar senior perpetual offering in the public bond market from an airport globally.
The proceeds from the securities will be used to fund AA’s capital expenditure, including the three-runway system (3RS) project, and for general corporate purposes. The HK$141.5 billion project is expected to be completed in 2024.
The securities are expected to be issued on 8 December and listed on The Stock Exchange of Hong Kong Limited.
Orders for the non-call 5.5-year and non-call 7.5-year tranches peaked at US$6.5 billion and US$8.0 billion and were 8.7 times and 10.7 times oversubscribed, respectively, the Airport Authority said.
The oversubscription rate for the two tranches enabled the AA to price the offering at 2.1 percent and 2.4 percent, which were 65 and 70 basis points tighter than initial price guidance, making it the lowest coupon rate ever for a US dollar-denominated Asian corporate hybrid transaction.
The debt securities are rated “AA” by American credit rating agency Standard & Poor’s, one notch below the current rating of the Airport Authority, to account for its optional coupon deferral feature.
The joint global coordinators and joint book runners are HSBC, Standard Chartered Bank and UBS, whilst the joint book-runners are BofA Securities, Bank of China and Mizuho Securities.