HONG KONG: Hong Kong's Airport Authority will issue a four-tranche US dollar bond to help raise funds for its third runway expansion, a term sheet showed on Wednesday.

It is hoping to raise $4 billion, two sources with direct knowledge told Reuters on when banks were mandated to work on the deal. The sources could not be named as the information had not yet been made public.

The deal comprises a 5-year green bond tranche, as well as 10-, 30- and 40-year paper, the term sheet showed. All bonds are denominated in US dollars, it showed.

The airport authority declined to comment when contacted by Reuters.

The initial price guidance is set at US Treasuries plus 80 basis points for the 5-year tranche, 110 basis points for the 10-year, 145 basis points for the 30-year and 170 basis points for the 40-year paper, according to the term sheet.

The guidance was significantly wider than in January last year when the airport raised $1.5 billion in 10- and 30-year tranches.

The deal will be a major test of investor sentiment towards Hong Kong's airport which has been hit by a huge number of flight bans and cancellations due to the city's ongoing pandemic restrictions. Hong Kong has largely isolated itself from the world hoping in turn to open the border with mainland China for a limited number of business travellers.

Final pricing is due to be set later on Wednesday, the term sheet said.

The authority last year reported a HK$4.4 billion ($564.21 million) loss for the 2020-2021 financial year ended March, according to the most recent publicly available numbers.