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Skip Navigation LinksHome :: Back Issues :: Hong Kong Airport aiming for growth

September 2000

Hong Kong Airport aiming for growth


At some point the government plans to privatize the Hong Kong Airports Authority, and is expected to give it more attention once it has sold off the Mass Transit Railway Corporation (MTRC).




"Once that is out of the way they will have a bit more free time to look at us," says HKAA treasurer Alex Kam. "Our aim is to be able to make ourselves ready for that as soon as possible, but it is not set in stone how it will be done," he adds. He pointed to a low debt-to-equity ratio, at around 18% with just HK$7 billion to HK$8 billion of debt currently outstanding following a HK$50 billion (US$8 billion) investment in the new airport at Chep Lak Kok.
       
HKAA: heading for international markets
To date the HKAA has raised all of its debt in the Hong Kong dollar markets, predominantly through three syndicated loans of HK$8.2 billion, HK$4 billion and HK$6.2 billion, making it one of the largest borrowers in the territory.
The authority also has a HK$5 billion note issuance programme, managed by the Hong Kong Monetary Authority, under which it has so far raised HK$3 billion, giving it particularly competitive funding rates. The HKAA is now in the process of getting a credit rating, which it expects to announce by mid-September, as the First step to accessing international capital markets.
Among the options under consideration are an MTN programme that would give HKAA additional Flexibility, although that would have to be weighed against the cost of maintenance. "I do not think we would be very frequent users of an MTN programme. This is a very capital intensive business and building of capacity is lumpy," Kam says. The airport is certainly aiming for growth, however. It has annual capacity of 45 million passengers and 3 million metric tonnes of cargo, of which it is currently using 32 million and 2 million respectively. Ultimately the plan is to grow to accommodate 87 million passengers and 9 million tonnes of cargo.
For the timing being, however, Kam and his team are considering refinancing options. "Right now the market is very favourable to borrowers like ourselves. If I am able to meet my objective, if it makes sense for me I will consider it," he says of refinancing through the capital markets.
HKAA's largest loan, for HK$8.2 billion, expires in September next year, and the loan, for HK$4 billion, is due in September this year. The HKAA has the luxury of a little time.






Dear Sirs, In view of what seems to be happening internationally with banks at the moment, I was wondering if you could advise me. If one of my cheques is returned marked ‘insufficient funds,’ how do I know whether that refers to you or to me?

A letter by a customer to a bank seen by Euromoney. One can’t help feeling that the balance of power in the relationship has changed somewhat

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