People wear facemasks as a precautionary measure against coronavirus infection, as they walk near the check in counters at Hong Kong International Airport on March 24, 2020. (ANTHONY WALLACE / AFP)

HONG KONG - The operator of Hong Kong’s main airport is aiming to raise as much as US$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 US dollar denominated unsecured notes, a term sheet showed.

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

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

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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 US$500 million and Bank of China Aviation finalized a US$400 million issuance.

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

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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 (US$18.3 billion).

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

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

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