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Airport Authority Prices US$1.5 Billion Dual-Tranche Senior Notes Offering

2021/01/29

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, EXCEPT TO “QUALIFIED INSTITUTIONAL BUYERS” (AS DEFINED IN RULE 144A UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR IN ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE PROHIBITED BY APPLICABLE LAW.

(HONG KONG, 29 January 2021, 1100hrs) – Airport Authority Hong Kong (AA) announces that it has successfully priced a US$1.5 billion dual-tranche senior notes offering (the Notes) consisting of US$900 million 1.625% senior notes due 2031 (the 10-year tranche) and US$600million 2.625% senior notes due 2051 (the 30-year tranche).

This is the AA’s inaugural bond issuance under Regulation S/Rule 144A. With the completion of this landmark deal, the AA becomes the highest-rated airport globally by S&P Global Ratings, a division of the S&P Global, Inc. (S&P) to have tapped the Regulation S/Rule 144A US dollar bond market. The AA has set a number of new records on its inaugural Regulation S/Rule 144A notes offering, with the 10-year tranche representing the lowest yielding US dollar bond and the 30-year tranche being the longest dated US dollar bond that the AA has issued.

The Notes were well-received by global investors, with orderbook for the 10-year and 30-year tranche peaking at US$4.4 billion and US$4.1 billion respectively. The 4.9 times and 6.8 times oversubscription rate for the two tranches enabled the AA to price the offering at T+65 and T+80, or a yield of 1.719% and 2.639% respectively, which were 35 and 40 basis points tighter than initial price guidance.

The Notes being priced in a Regulation S/Rule 144A format presented the AA with the opportunity to engage investors categorized as “qualified institutional buyers” in the United States for the first time. This allowed the AA to further diversify its investor base which historically consisted of Asian and European investors to include US onshore domestic accounts as well.

Asian and European investors received 58% and 9% in allocation respectively on the 10-year tranche, while the remaining 33% went to US investors. For the 30-year tranche, investors in Asia and Europe were allocated 63% and 5% of the Notes respectively and US investors received 32%.

More than 180 professional and institutional investors including sovereign wealth funds, asset managers, corporations, banks and insurance companies across Asia, Europe and the US participated in the transaction.

The proceeds from the Notes will be used to fund the AA's capital expenditure including the capital expenditure of the Three-runway System project (3RS) and for general corporate purposes. The Notes are expected to be issued on 4 February 2021, subject to the satisfaction of certain conditions precedent and are expected to be listed on The Stock Exchange of Hong Kong Limited.

Jack So, Chairman of the AA said, “We would like to thank the global investors for their support on our recent capital market transactions. The solid market response is a testament to the strength and resilience of the AA's credit profile as well as HKIA's role as an international aviation hub."

The construction of the 3RS commenced in August 2016. The 650-hectare reclamation is substantially complete. The construction of the 3RS targets completion in 2024 at a total budgeted capital expenditure of HK$141.5 billion in money-of-the-day terms.

The Notes are expected to be rated “AA+” by S&P.

The Joint Global Coordinators and Joint Bookrunners are BofA Securities, HSBC, Standard Chartered Bank and UBS; and Joint Bookrunners are BOC International, Citigroup, Deutsche Bank and Mizuho Securities.

Important Notice

This release is not for distribution, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia). This release does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933 (the “Securities Act”).

Such securities may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act. There will be no public offer of securities in the United States.

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