Hong Kong Financial Secretary Paul Chan Mo-po delivers a speech during the issuance ceremony of Hong Kong International Airport retail bonds, in Hong Kong on Feb 6, 2024. (ZHANG TIANYUAN / CHINA DAILY)
The issuance of the Airport Authority Hong Kong’s HK$5 billion ($639 million) retail bonds could serve as a reference for other large projects that need public financing in future, said Financial Secretary Paul Chan Mo-po on the first trading day of the bonds.
“The offering could also provide a safe and secure investment option for Hong Kong residents,” Chan said at the issuance ceremony on Tuesday.
The retail bonds made a strong debut on the Hong Kong Stock Exchange, opening at HK$101 and reaching a high of HK$101.6 in morning trading.
Financial Secretary Paul Chan Mo-po noted that the bonds mark a significant milestone as they are the first of their kind to be sold to the public by the city’s airport authority, while its previous bond issuance targeted institutional investors
The finance chief noted that the bonds mark a significant milestone as they are the first of their kind to be sold to the public by the city’s airport authority, while its previous bond issuance targeted institutional investors.
“The government has been striving to foster a more inclusive development for Hong Kong as an international financial hub,”Chan said.
Over the past few years, the Hong Kong Special Administrative Region government has issued about HK$190 billion in retail bonds, each issuance receiving “strong support” from the public, he said.
Carrying a fixed interest rate of 4.25 percent and a 2.5-year tenor, this batch of bonds was oversubscribed by 2.1 times, drawing HK$15.69 billion from 175,178 applications.
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In this file photo dated Nov 25, 2022, a Cathay Pacific airplane takes off from the third runway at the Hong Kong International Airport in Hong Kong. (ANDY CHONG / CHINA DAILY)
Up to three trading lots were allocated for each valid application. Each lot is expected to yield a total interest income of HK$1,062.5 if an individual investor holds the bonds due on the redemption date.
Jack So Chak-kwong, chairman of the board of the Airport Authority Hong Kong, said the retail bonds issuance is the final leg of a HK$140 billion funding program for the construction of the third runway, which he said he is confident will be completed by the end of this year.
Jack So Chak-kwong, chairman of the board of the Airport Authority Hong Kong, said the retail bonds issuance is the final leg of a HK$140 billion funding program for the construction of the third runway, which he said he is confident will be completed by the end of this year
The third runway is expected to be operational by the end of the year and will expand the airport’s annual capacity to 120 million passengers, compared with the current capacity of 70 million.
The new runway will also enable cargo throughput to double to 10 million metric tons, providing the airport with greater development potential, So said.
This expansion will help Hong Kong maintain its status as a leading global aviation hub and also promote economic growth in Hong Kong and in the other cities of the Guangdong-Hong Kong-Macao Greater Bay Area.
So said, “It is a wise decision for the airport authority to raise funds from the public rather than rely on government investment”, as this will ease the government’s fiscal burden and enhance the diversity and liquidity of the bond market.
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Hong Kong International Airport has witnessed a recovery in passenger numbers, which now stand at 80 percent of pre-pandemic figures. The airport authority expects there will be a full recovery to the pre-pandemic level, or around 70 million travelers, by the close of 2024.
