Changi Airport issues first bond offering
Company maintains excellent liquidity profile despite Covid-19’s impact on cash flow
5 May 2021 | Chito Santiago

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

The company on May 4 priced its maiden bond offering amounting to S$500 million (US$373 million) for 10 years at par, with a coupon of 1.88% or a spread of 25bp over the Singapore swap offer rate. The coupon was in line with the final price guidance and 12bp tighter than the initial range of 2% area.

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

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.

CAG’s bond foray follows that of Incheon International Airport Corporation, which printed on April 26 its first public bond transaction amounting to US$300 million. The five-year green bond garnered a strong investor demand with an order book in excess of US$1.9 billion from 115 accounts. Earlier in January, Airport Authority Hong Kong (AAHK) 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 a huge order book of US$8.5 billion from 355 accounts as AAHK diversified its funding source by accessing the 144A market for the first time.

Moody’s Investors Service, which assigned an Aaa rating to the deal, notes that CAG has retained an excellent liquidity profile despite the 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.

“The cash balance and additional liquidity will be more than sufficient to cover its likely capital expenditure requirements of around S$900 million over the next 12 months and debt pre-payment of around S$300 million in 2021,” Moody’s adds.

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

Like the other international airports, CAG saw a dramatic decline 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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