Airport Authority Hong Kong (AAHK), which runs the city’s airport, on Tuesday secured five-year loan facilities worth HK$35 billion (US$4.9 billion) from 21 local and international banks.
The loans, which AAHK said indicated market confidence in Hong Kong’s aviation sector, include a term loan worth half of the total amount and a revolving credit facility.
“The all-in pricing of 82 basis points over the Hong Kong Inter Bank Offered Rate (Hibor) is among the lowest interest rates for club or syndicated bank loan deals with the same tenor, since the outbreak of Covid-19,” the authority said in a press statement.
AAHK said it had to raise the financing amount by 75 per cent over an initially planned amount of HK$20 billion because of overwhelming demand from banks. “This support shows their confidence in the AAHK and the long-term development prospects of Hong Kong International Airport,” Jack So, the authority’s chairman, said in the statement. “Much more than a financial instrument, the facilities represent the global banking community’s faith in Hong Kong’s future.”
The money will be used to fund AAHK’s capital expenditure, including the Three-runway System, and for general corporate purposes, it said.
Passenger volume at Hong Kong International Airport plunged 99.4 per cent year on year in May, while the number of flights declined 68.7 per cent. A surge in cargo during the pandemic, however, boosted cargo flights by 29.3 per cent year on year. Hong Kong’s aviation sector was already suffering last year, before the pandemic struck, because of anti-government protests in the city, which hindered passenger traffic and tourism.
Lei added that the development of the Three-runway System will help Hong Kong, as it will allow global airlines to increase routes.
“Opportunities and challenges – both exist for Hong Kong International Airport,” said Diao Weimin, a professor at the Civil Aviation Management Institute of China. Although the higher-than-expected loan amount shows investors and financial institutions were relatively positive about the outlook of the aviation industry in Hong Kong, competition from airports in South Korea, Singapore and major cities in the Greater Bay Area would be a big challenge in the future, he said.
“How to enhance its services for passengers, especially for people from the Greater Bay Area, will be challenging,” Diao added.