A study for the three-runway system (3RS) project at Hong Kong International Airport has concluded funding for the plan is “robust and practicable”.
The Airport Authority Hong Kong (AA) has released the report submitted by its financial advisor Hongkong and Shanghai Banking Corporation Limited (HSBC) after after in-principle acceptance by the board of the AA.
The AA says the objective of the study was to analyse different debt structures, identify suitable forms of financial instruments, and make recommendations on the financial instruments in relation to their timing, size and tenor that will enable it to raise funding for the 3RS project in the “most optimal manner”.
The approach and key funding objectives recommended by HSBC entail raising debt on cost-effective terms consistent with the AA’s investment plans and funding needs, whilst allowing flexibility in the timing of market approach. HSBC also examined all potential forms of financing, including the possibility of allowing public participation.
HSBC concludes the AA has strong access to debt markets and is “confident” that AA will be able to raise the required incremental debt of up to HK$69 billion ($8.8 billion) on reasonable terms and the funding plan is robust and practicable.
The report says overall financial arrangements for the 3RS are based on the “joint contribution and user-pay” principle with funding provided through three sources: retaining AA’s operating surplus, levying an airport construction fee on passengers departing from HKIA and borrowings from the market.