Hong Kong’s Airport Eyes $2.6 Billion Loan for Third Runway

(Bloomberg) -- Hong Kong’s Airport Authority is in talks with banks for a HK$20 billion ($2.6 billion) loan to help fund the city’s third runway, according to people familiar with the matter.

The five-year facility, which is also meant for general corporate purposes, offers an interest margin of 72 basis points over the Hong Kong interbank offered rate and a top-level all-in of 82 basis points, said the people who are not authorized to speak publicly and asked not to be identified.

A spokesperson for Airport Authority said in a press release Wednesday night it faces a “significant shortfall in revenue because of the traffic plummet” and “will go to the financial market in the next two months to raise the necessary funds, in order to maintain its own liquidity for funding the airport operation and the committed capital projects.”

The loan will also be used to finance a new relief package of up to HK$2 billion aimed at easing liquidity pressure for airlines and aviation support service operators, according to the release.

The fundraising comes as air traffic has plunged in the wake of the coronavirus pandemic. Funding costs have also risen for banks in Greater China amid a global dollar liquidity squeeze.

The borrower has a HK$5 billion five-year revolver due December, data compiled by Bloomberg show.

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