(HONG KONG, 10 March 2003) - The Airport Authority (AA) today announced its second issue of bonds for retail investors in Hong Kong. This follows the highly successful first placement of AA retail notes a year ago.
The latest issue has four tranches:
- A three-year HK-dollar note with 2.3 per cent coupon;
- A two-year HK-dollar note extendable for two years with 2.7 per cent coupon;
- A three-year US-dollar note extendable for two years with 2.95 per cent coupon; and
- A seven-year HK-dollar note with 4.3 per cent coupon
The US-dollar note and the seven-year note are the first of their type to be offered by a public corporation in Hong Kong.
At today's launch, AA Chairman Dr Victor Fung said the local capital market, the Authority, and Hong Kong investors would all benefit from the latest bond issue.
The Airport Authority had been a catalyst in the development of the local capital market, Dr Fung said. In 1998 it was one of the first public bodies to sell debt to institutional investors under the Note Issuance Programme with the Monetary Authority. In February 2001 its Floating Rate Notes issue set the benchmark for the pricing of similar debt in the capital market. In March 2002 it issued its first retail bonds.
The bond issue would continue to establish the AA's name in the capital market, Dr Fung said, and help manage borrowings with a range of tenors for the rest of the decade. He noted too that the bonds were good news for retail investors.
"Before our AA's debt issues in the retail bond market, debt investment for the general public focussed mainly on bank deposits and other investment funds," he said. "We are providing debt instruments with an investment grade as high as the Hong Kong Government, in a diversified and growing industry. Hong Kong retail investors can now enjoy the safety, security, and a rate of return and maturity previously only available to institutions. In the current international environment, these are important developments."
The launch of the latest retail bonds coincided with the Government's announcement in its Budget last week of new tax incentives for Qualifying Debt Instruments (QDIs) such as AA's retail bonds. Under this initiative, any gains on trading three- and five-year QDIs will only be subject to half the profits tax, while the new seven year bond will be completely tax free.
Last year's issue, which was 13 times oversubscribed, had been highly successful. For example, Dr Fung noted last year’s three-year notes were trading at about a 5 per cent premium over the issue price.
"When you add the 4.5 per cent interest for the year, that's a pretty good deal," he said. "So I’m sure the market will be happy to see us back with a new range of opportunities for Hong Kong retail investors."
Ownership of the bonds offered the people of Hong Kong a direct interest in one of the world’s finest airports, he added. "These bonds are a practical way for the people of Hong Kong to participate in the development of this award-winning transport and logistics facility."
Ref: PR-673
