Hong Kong Airport third runway proposal to take off with HK$5 billion loan, authority chief says
Jack So says five-year syndicated loan deal lays ‘solid foundation’ for project
The Airport Authority is heralding a HK$5 billion loan as a vote of confidence from the financial community for its HK$141.5 billion project to build a third runway.
The recent success in clinching the syndicated loan would "lay a solid foundation for financing the three-runway system," said authority chairman Jack So Chak-kwong yesterday.
He was referring to a five-year revolving credit facility signed by 21 local and international banks.
"The terms for us are excellent," So said after the deal was signed.
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The credit facility was oversubscribed by a factor of 3.4.
"This credit facility represents the global banking community's faith in Hong Kong's future," So said.
The money will be used for general corporate purposes, including some preparation work for the third runway.
So said he hoped the project could begin as soon as possible.
"Unless we expand [our airport's capacity], travellers are going to experience delays," So said. "Hong Kong stands to lose its position as Asia's aviation hub."
He said the authority would closely supervise the project's implementation, ensuring it would not lead to cost overruns.
The project will be funded from three sources: bank loans and issued bonds, the airport's operational surplus and an airport construction fee imposed on departing passengers.
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A leading banker, who was involved in arranging the syndicated loan, said it was difficult to say whether the authority could secure the same terms for future loans for the runway project.
"Banks, as lenders, have to consider the overall conditions of the market," said Andrew Fung Hau-chung, an executive director of Hang Seng Bank.
"But the terms of the latest deal reflect the fact that many banks are looking for good quality assets after a slowdown in the growth of the loan market," said Fung, who sits on the Airport Authority's board.
Dr Wilson Chan Fung-cheung, an adjunct professor at City University, said the terms of the HK$5 billion loan indicated that the authority could borrow at a low interest rate for the third runway project.
"But the favourable terms may come with strings attached, such as a loan guarantee provided by the government or other entities," said the academic.
