Malaysia Airports, which counts sovereign fund Khazanah as a major shareholder, is expected to begin syndicating a €500 million ($588 million) loan for its Turkish airport this week.
Malaysia Airports, which last year bought an additional 40% stake in Istanbul Sabiha Gokcen Airport for €279 million and is rated A3 by Moody's, is looking to refinance the debt owed by Turkey's second-largest airport on better terms.
Istanbul Sabiha Gokcen Airport is one of two international airports serving Istanbul and a beneficiary of fast-rising traffic in Europe. According to a research report by Maybank last year, Istanbul has the highest passenger traffic growth in Europe and has become the tenth busiest aviation hub in the world, with total traffic of 69.8 million passengers in 2013.
Turkey is also the sixth-most visited country in the world by visitor arrivals.
“It’s a cash flow producing asset and will benefit from the support of Malaysia Airports,” one source familiar with the matter said.
The loan is expected to have a tenor of seven years and an average life of five years after amortisation. The underwriters are BNP Paribas, CIMB and Deutsche Bank.
The Turkish acquisition marks Malaysia Airports’s ambitions to grow internationally. Malaysia Airports operates 39 airports in Malaysia, including the country's gateway KL International Airport. Outside of Malaysia it also has operations in India.
Elsewhere, Hong Kong's syndicated loan market is primed for a bumper start to the year with Chueng Kong Property expected to syndicate a HK$55 billion loan ($7.1 billion).
That's in the wake of plans by Hong Kong’s richest man Li Ka-shing to revamp the holdings of his two flagship companies, Cheung Kong Holdings and Hutchison Whampoa, to create more value for shareholders. A central plank of the plan is the formation of two new companies in place of Cheung Kong Holdings and Hutchison Whampoa -- one of them being Chueng Kong Property.
The company is expected to hold a meeting with its relationship banks in Hong Kong on January 26 to explain the objective of the spin-off, according to one source familiar with the matter.
CK Hutchison Holdings (CKH Holdings) will hold all the non-property business of both groups and be a multinational conglomerate with assets ranging from telecoms and ports to infrastructure assets, while CK Property Holdings will hold the property businesses of both groups.
The loan will be taken by CK Property to buy all of CKH Holdings’ development and rental property and hotels. According to an exchange filing, HSBC has funded HK$45 billion and Bank of America Merrill Lynch has funded HK$10 billion.
CK Property will have a development landbank of about 170 million square feet, including 158 million square feet in mainland China, 17 million square feet of rental properties and more than 14,600 hotel rooms.
Despite the company's heavy exposure to China and ongoing concerns over the possible oversupply of homes there, CK Property's loan isn't expected to encounter any difficulty due the group's strong reputation and backing.
"I think the loan will be well received. The company has a strong track record of doing what they set out to do," one lender said.
Since the news of the restructuring was announced on January 9, Hutchison Whampoa’s stock has risen by 11% and Cheung Kong Holdings stock has risen by 13%.