Hong Kong Monetary Authority - Airport Authority HK$5 billion Note Issuance Programme

Press Releases

16 Oct 1997

Airport Authority HK$5 billion Note Issuance Programme

The Airport Authority announced today the signing of a HK$5 billion Note Issuance Programme arranged by the Hong Kong Monetary Authority (HKMA).

The Programme will allow the Airport Authority to issue notes with a denomination of HK$50,000 and maturities of up to 10 years. The first issue of HK$500 million is likely to be launched later this year or in early 1998, subject to favourable market conditions. This is the second note issuance programme for which the HKMA acts as the arranger, agent and operator for the issuer. The Programme will be covered by the existing market-making arrangements for Exchange Fund Bills and Notes.

At today's signing ceremony, Mr Wong Po-yan, Chairman of the Airport Authority, reiterated the strength of the new airport business.

"The new airport will open next April, on time and within budget," Mr Wong said. "As we get closer to airport opening, we find ourselves heading into a very exciting, dynamic phase in the aviation business.

"The overall strength of our business has been widely acknowledged. Apart from a substantial capital injection from our sole shareholder, the Government, we will be inheriting from Kai Tak a fairly solid and flourishing business. Our strength is also built upon our ability to create diversified, nicely balanced and relatively stable streams of revenue comprising airport charges, retail operations and aviation franchises and terminal office rentals.

"Of equal significance is our unwavering commitment to running our business on prudent commercial principles and applying stringent measures of cost control. By putting out all our works, service and commercial contracts through open tender on the basis of a level playing field, we have been able to hold costs down without compromising the quality of service to be provided.

"The new airport at Chek Lap Kok is being developed innovatively to meet market demands. I am sure the success of our new airport, to which each of you in the financial community has contributed in no small measure, will both mirror and support that of the SAR well into the next century."

Mr Joseph C K Yam, Chief Executive of the HKMA, said, "The Note Issuance Programme should enable the Airport Authority to borrow Hong Kong dollar funds at a lower cost. This is achieved through the market making arrangements and the eligibility for LAF which together ensure a high degree of liquidity and therefore enhance the attractiveness of the paper in the secondary market, enabling the paper to be more finely priced."

The Mass Transit Railway Corporation (MTRC) launched a similar note issuance programme in 1995 which enabled the Corporation to raise funds at below the interbank interest rates. Under the Airport Authority Note Issuance Programme, notes will be sold from time to time by tender to a group of appointed recognised dealers and market-makers. By extending the existing market-making arrangement of the Exchange Fund Paper Programme to these Airport Authority notes, market-makers are obliged to quote two-way prices for the Airport Authority notes during money market hours. In return the market-makers can go short in any issues of the Exchange Fund paper or Airport Authority or MTRC notes provided they hold sufficient amount of other Exchange Fund paper or Airport Authority or MTRC notes in the system to square off their short positions by entering into a repo transaction with the HKMA at the end of the day.

Notes issued under the Airport Authority Note Issuance Programme will be cleared through the Central Moneymarkets Unit and will be eligible for discounting under the Liquidity Adjustment Facility operated by the HKMA.

Joint Press Statement issued by :
Hong Kong Monetary Authority & Airport Authority

16 October 1997

Enquiries:

Mr Albert Chan Tel: 2878 8246

Senior Manager (Press & Publications)

Hong Kong Monetary Authority

Miss Terri Lai Tel: 2824 7705

Media Relations Manager

Airport Authority

Hong Kong