Changi Airport Group taps bond market for S$500 million

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Singapore has opened new Vaccinated Travel Lanes with about a dozen countries to reopen its connections to the world. Show is Changi Airport in Singapore. (PHOTO: Shutterstock)

Use this oneThe operator of Changi Airport in Singapore has tapped global bond markets seeking to raise as much as S$500 million (US$373 million). Changi Airport Group (CAG) priced the bond issue for 10 years at par, with a coupon of 1.88 percent or a spread of 25 basis points over the Singapore swap offer rate. The coupon was in line with the final price guidance and 12 basis points tighter than the initial range of 2 percent area. DBS acted as the sole global coordinator for the transaction, as well as a joint bookrunner along with HSBC, OCBC Bank and United Overseas Bank.

Changi Airport, like others around the world, has seen a dramatic drop in passenger traffic due to the pandemic and the subsequent shut down in international aviation. Singapore has been hurt harder than other countries because it has no domestic aviation market to fall back on and international traffic remains hobbled by various border closures and quarantine measures put in place to slow the spread of COVID-19. Singapore hopes to establish a so-called “travel bubble” with Hong Kong later this month, but both cities are concerned any jump in COVID-19 cases could scuttle what would be their second attempt to open their borders to each other.

CAG’s bond issue follows that of South Korea’s Incheon International Airport, which sought to raise US$300 million. That five-year green bond garnered a strong investor demand with an order book in excess of US$1.9 billion. Earlier in January, the Airport Authority Hong Kong priced a dual-tranche deal totalling US$1.5 billion, comprising of US$900 million for 10 years and US$600 million for 30 years. The transaction attracted an order book of US$8.5 billion from 355 accounts.

Moody’s Investors Service, which assigned an Aaa rating to the Changi deal, said that CAG has retained an excellent liquidity profile despite the COVID-19 pandemic’s impact on cash flow. Although cash holdings declined to around S$1.9 billion as of December 2020 from around S$2.4 billion at the end of fiscal year 2020, its cash buffer remains strong and is slightly more than borrowings as of December last year. It says the company also demonstrated its market access and pro-active liquidity management by completing sustainability-linked revolving credit facilities of S$2 billion with bank lenders, according to Moody’s.

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