Hong Kong’s airport authority to launch US$640 million retail bond, its first in 20 years, to finance third runway

The Airport Authority Hong Kong (AAHK) is set to raise up to HK$5 billion (US$640 million) from a retail bond this month. This marks its first offering to the general public in two decades, with the funds earmarked for the construction of its third runway and other operational costs.

This move follows the authority's successful raising of HK$4 billion earlier this week from a 3. 5-year bond sale to institutional investors. This is only the third instance of the airport authority issuing retail bonds, with previous issuances taking place in 2002 and 2003. Julien Lee, the executive director of finance at AAHK, stated at a media briefing that the retail bonds are being issued to provide Hong Kong residents with an opportunity to participate in the third runway project.

The third runway is projected to increase the Hong Kong airport's capacity by an additional 30 million passengers annually, thereby bolstering its status as a major aviation hub. When the airport authority unveiled its finance plan in 2016, the government opted not to utilize tax payers’ funds, thereby circumventing the need for approval from the city’s Legislative Council. Instead, the AAHK imposed additional charges on airlines and introduced a levy of HK$180 to be paid by departing passengers. The authority also decided to utilize its own savings, secure bank loans, and issue bonds to finance the mega project.