Hong Kong airport operator's first offshore yuan bond raises US$207 million with 8 times oversubscription rate
Hong Kong's airport operator has debuted in the offshore yuan bond market, raising a 1.5 billion yuan (US$207 million) senior offering after receiving a strong investor response.
The transaction is the first 10-year offshore yuan bond, or "dim sum" bond, from a Hong Kong corporate issuer in the public bond market, Airport Authority Hong Kong (AAHK) said on Thursday.
The order book reached a peak of 12.3 billion yuan, marking an oversubscription rate of more than eight times. The 2.93 per cent coupon was tightened from the initial 3.4 per cent.
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Asian investors were allocated 96 per cent of the bond, which was rated AA+ by S&P, while the rest went to European investors. They included banks, asset managers, private banks and securities firms.
"The successful issuance once again proves the investors' confidence in the Hong Kong International Airport as a regional and international aviation hub," said Jack So, AAHK's chairman. "The notes also diversified AAHK's funding sources in the capital market with the most competitive financing costs."
Debt denominated in yuan has become comparatively cheaper since borrowing costs have been elevated in the US dollar market after a series of interest-rate increases by the Federal Reserve since March 2022.
Hong Kong is well positioned to support offshore yuan needs, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu told a conference in February. Last year, dim sum bonds issued in the city increased by 65 per cent to 550 billion yuan compared with a year earlier.
"The well-received transaction also demonstrated investors' interest in the offshore renminbi bond markets, even for long durations, and we hope this will encourage more issuers to tap the markets in the future," David Yim, head of capital markets for Greater China and North Asia at Standard Chartered, one of the coordinators of the latest AAHK issuance, said in a statement.
The 1.5 billion yuan issuance, which is expected to be issued on June 5, will be used for general corporate purposes, including capital injections in AAHK's investment projects.
It follows another institutional bond offering from the airport operator in January: a HK$4 billion (US$511.6 million), 3.83 per cent, 3.5-year transaction that marked the first time that AAHK tapped the Hong Kong dollar market.
In February, AAHK raised HK$5 billion in retail bonds in the first opportunity for the general public to invest in the city's airport operator in two decades. The 4.25 per cent, 2.5-year bonds were oversubscribed more than three times.
Those bonds marked the last leg of financing for the airport's third runway, which is expected to allow the facility to handle an extra 30 million passengers each year and strengthen its status as a leading aviation hub.
The airport recorded 4.23 million passengers last month, a 35.9 per cent increase from a year ago, AAHK announced on Tuesday. Meanwhile, its cargo volume registered a 13.9 per cent year-on-year increase to 394,000 tonnes. Last year, the airport retained its position as the world's busiest cargo hub.
The joint global coordinators, bookrunners and lead managers for the latest issuance are Bank of China, HSBC and Standard Chartered. The joint bookrunners and lead managers are Bank of Communications, Credit Agricole CIB, DBS Bank, ICBC and UBS.
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