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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.

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
Jonathan Drew_400x225.jpg

“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.