Sydney Airport Completes US Private Placement Bond Issuance

  • Oct 08, 2018 AEDT
  • Team Kalkine
Sydney Airport Completes US Private Placement Bond Issuance

On 8 October 2018, Sydney Airport (ASX: SYD) announced the successful completion of US private placement bond issuance.  Sydney Airport raised about A$400 million through multi-tranche US private placement bond. After the release of this news, the share price of the company reduced by 0.742 percent as on 8 October 2018.

As per the release, the A$400 million multi-tranche US private placement bond issued on: 15-year tenor of A$62.5 million tranche maturing in February 2034, the 25-year tenor of A$100 million tranches maturing in February 2044, 20-year tenor A$135 million tranches maturing February 2039, and 30-year tenor A$100 million tranches maturing in February 2049. With the second issuance into the US private placement market, the funding sources of the company have been diversified. The proceeds raised from this placement will be used to repay all drawn bank debt, unlocking additional liquidity to cover future debt maturities and to fund planned ongoing investment.

Sydney Airport recently disclosed its Air Traffic performance on 20 September 2018. Sydney Airport announced that its passenger growth has remained solid and during the month of August 2018 the total passenger growth uplifted by 3.8% compared to the prior corresponding period. The overall international traffic grew by 4.7 percent in the month of August 2018 due to additional seat capacity. There was also a 2.9 percent load factor improvement due to which the domestic passengers also increased by 3.3 percent in the month of August compared to the prior corresponding period.

On 12 September 2018, the Sydney Airport announced that the Sydney gateway is going to proceed which will result in the improvement of road and rail access to Sydney Airport and it will also enhance the passenger experience, support the efficiency of airline and freight operators and it will ease the commute for the 31,000 people that are working at the airport. It also provides an opportunity for airport land to be better utilized with improved airside connections which will support growing passenger and freight operations.

In the first half of FY2018, the total revenue earned by the Sydney Airport increased by 7.9 percent to $770.8 million compared to the prior corresponding period. The total operating expenses were $147.4 million in 1H2018 compared to $136.6 million in 1H2017. Earnings before interest and tax increased from $577 million in 1H2017 to $623.4 Mn in 1H2018. Through Capital investment of $179.6 million in 1H 2018, the Sydney airport is able to deliver more aviation capacity, improvements in service and customer facility, improved airport access and an improved customer experience. The distribution declared per stapled security was 18.5 cents in 1H 2018. With $1.4 billion in undrawn bank debt facilities, Sydney Airport is having a strong liquidity position.  

Sydney airport reaffirmed its CapEx guidance of up to $1.3-$1.5 billion for the 2018-2021 period inclusive, with approximately $360-$400 million expected to be invested for the full year 2018 and it also reaffirmed the distribution guidance of 37.5 cents per stapled security for 2018 which is 8.7% higher than FY 2017. It reflects successful management initiatives, management and board confidence in the business outlook and strong tourism trends. In the last quarter of FY2018, Sydney Airport is also planning to open 14 new T2 stores. Sydney Airport is expecting a positive outlook in the future mainly due to the positive macro environment and strong business performance.

In the past six months, the share price of Sydney Airport increased by 2.90% as on 5 October 2018 and traded close to a PE level of 42.550x. SYD’s share traded at $6.690 with a market capitalization of circa $15.2 billion as on 8 October 2018 (AEST 4:00 PM).

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