Changi Airport issues its first bond issue

Company maintains excellent liquidity profile despite Covid-19 impact on cash flow

Singapore airport operator Changi Airport Group (Singapore) (CAG) has joined regional peers to raise funds through the bond market in what is seen as preparation for a possible resumption of air travel with the growing deployment of the Covid vaccine -19.

The company valued its first 10-year bond offering of S $ 500 million (US $ 373 million) on May 4 at par, with a coupon of 1.88% or a spread of 25bp per compared to the Singapore swap offer rate. The coupon was in line with the final price forecast and 12bp tighter than the initial range of 2% surface.

As part of the transaction’s execution, CAG held a series of bond investor calls on April 29 following the update to its S $ 2 billion multi-currency medium-term note program in February. of this year. The transaction generated a total demand of S $ 1.4 billion from 85 accounts, 89% of the distributed bond in Singapore and 11% in Hong Kong, Europe and other jurisdictions. By type of investor, fund managers, insurance companies and agencies accounted for 61% of paper, with the public sector and banks taking 36% and private banks 3%.

DBS acted as the sole global coordinator of the transaction, as well as an associate bookrunner with HSBC, OCBC Bank and United Overseas Bank.

CAG’s bond foray follows that of Incheon International Airport Corporation, which printed its first US $ 300 million public bond transaction on April 26. The five-year green bond has generated strong investor demand with an order book of over US $ 1.9 billion from 115 accounts. Earlier in January, Airport Authority Hong Kong (AAHK) proposed a two-tranche deal totaling US $ 1.5 billion, including US $ 900 million over 10 years and US $ 600 million over 30 years. The transaction attracted a massive US $ 8.5 billion backlog from 355 accounts as AAHK diversified its funding source by entering the 144A market for the first time.

Moody’s Investors Service, which assigned an Aaa rating to the transaction, notes that CAG has maintained an excellent liquidity profile despite the pandemic’s impact on cash flow. Although cash holdings fell to around S $ 1.9 billion in December 2020, from around S $ 2.4 billion at the end of fiscal 2020, its cash reserve remains strong and is slightly above S $ 2.4 billion. borrowings in December of last year. He says the company has also demonstrated its market access and proactive liquidity management by completing S $ 2 billion sustainability-linked revolving credit facilities with bank lenders.

“The cash balance and additional liquidity will be more than sufficient to cover its probable investment needs of approximately S $ 900 million over the next 12 months and the prepayment of debt of approximately S $ 300 million in 2021, ”adds Moody’s.

Moody’s also expects a very high likelihood of Singapore government support for CAG, reflecting its important role in owning and operating Changi Airport, which is the main international gateway to destination. and from Singapore.

Like other international airports, CAG saw a dramatic drop in passenger traffic in 2020 to 11.8 million from 68.3 million in 2019 due to strict travel restrictions to prevent the spread of the coronavirus.


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