MTR Corp. of Hong Kong raises US$3 billion in its biggest bond offering.
Hong Kong’s MTR Corp has issued its largest public bond, raising US$3 billion from a three-tranche offering amid a hot credit market in Asia.
The railway operator’s bond received a strong response from local and international institutional investors, who subscribed to US$13.4 billion in the book-building process, or 4.47 times the issue size. The pricing was tightened by 27 to 35 basis points from the initial price guidance.
The five-year US$500 million tranche was priced at 4.375 per cent, the 10-year US$1 billion note at 4.875 per cent and the 30-year US$1.5 billion tranche at 5.25 per cent. The 30-year tranche was the largest US dollar note from a Hong Kong corporate issuer in more than two decades, MTR Corp said on Wednesday.
“The successful bond issuance highlights the confidence investors have in our operational capabilities and financial strength,” said Michael Fitzgerald, MTR Corp’s finance director.
The funds would support infrastructure development and asset replacement, he added.
The transaction set new benchmarks for issuers in Hong Kong and Asia, according to Rainy Lu, executive director of debt capital markets at UBS global banking. UBS was a joint global coordinator for the issue.
The US$3 billion note was the largest-ever Reg S-only bond by a Hong Kong issuer and the biggest in Asia since January 2020, the bank said. Reg-S refers to securities issued under Regulation S of the US Securities Act, allowing issuers to access global markets cost-effectively by issuing to non-US investors without registering with the US market watchdog.
MTR Corp’s deal came amid a buoyant Asian bond market as risk sentiment remained steady ahead of further US trade tariffs due early next month, according to analysts.
“This year, the overall sentiment in the Asian bond market is positive, with ample liquidity in the bond market and credit spreads remaining at historically low levels,” said Lu.
“Compared with previous years, we see a significant increase in bond issuance. Recent bond transactions have shown ideal performance in terms of subscription multiples, issuance costs and aftermarket performance, driving the market to continue its positive development.”
US dollar bond sales from Asia-Pacific issuers have risen to about US$49 billion this month, the most for any month since 2021, according to Bloomberg data.
“Credit conditions in Asia-Pacific are steady on accommodative financing conditions and solid domestic consumption,” Eunice Tan, head of Asia-Pacific credit research at S&P Global Ratings, said in a report on Wednesday. “Yet, fluctuating US tariff rhetoric and policy actions are complicating the credit landscape and stoking market volatility.”
Earlier this month, MTR Corp reported a doubling of net profit to HK$15.8 billion (US$2 billion) last year, its best showing since 2018. The company said it would spend about HK$90.8 billion between 2025 and 2027, mostly on maintenance and new railway projects.
