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Hong Kong airport authority kicks off greenwashing debate with landmark issue

A ‘remarkable’ global dollar bond from Airport Authority Hong Kong raises the question of whether any member of the aviation sector should include a green tranche within its funding structure.

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Hong Kong International Airport on the island of Chek Lap Kok

The $4 billion bond from the Airport Authority Hong Kong (AAHK) was quite the curtain-raiser for Asian debt capital markets (DCM) in 2022. It had a bit of everything: record-breaking scale; pointers on investor sentiment in a strikingly unpredictable new year environment; and a greenwashing debate.

The multi-tranche 144a/RegS senior unsecured notes offering was made up of a $600 million 40-year tranche, 30- and 10-year tranches at $1.2 billion apiece, and a $1 billion five-year green tranche. It priced on January 5 at spreads ranging from 42.6 basis points over Treasuries at the short end to 140 over old long bond (OLB) at the long.

Viewed as a whole, it is a notable deal: the largest US dollar bond from a Hong Kong issuer since Hutchison Whampoa in 2003; the largest bond from an airport operator since 2017 when nobody had ever heard of Covid; and the longest tenor achieved by a Hong Kong issuer.

The success of this transaction shows, perhaps, the confidence in society that we are going to crack this Covid thing
Jonathan Drew, HSBC
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“In the context of historical issuance from this part of the world, the deal’s size is remarkable,” says Alvin Yeo, head of green and sustainable finance, leveraged DCM at UBS.

It